The United States Securities and Exchange Commission (SEC) has opted not to appeal the court ruling in favor of Grayscale regarding the approval of a spot Bitcoin exchange-traded fund (ETF).
Further, the decision was initially due by mid-October but has now been confirmed, as reported by Reuters, citing a knowledgeable source.
SEC vs. Grayscale: A Prolonged Battle
The legal dispute between the SEC and Grayscale traces back to last year when Grayscale applied to the SEC for the conversion of its flagship product, Grayscale Bitcoin Trust (GBTC), into a spot Bitcoin ETF. This conversion was part of Grayscale’s strategy to transition its major Trust products into ETFs.
Additionally, approval of the application would enable Grayscale to offer a Bitcoin-backed asset that tracks Bitcoin’s price more closely than GBTC. After the SEC denied Grayscale’s request last year, the asset management company filed a lawsuit against the SEC.
Following a year-long legal battle, Grayscale achieved a significant court victory from a federal court presided over by three judges in August. The judges directed the SEC to consider approving Grayscale’s spot Bitcoin ETF application and criticized the agency’s continued delay as “capricious.”
SEC’s 45-Day Window for an En Banc Court Hearing
In response to the August court decision in favor of Grayscale, the SEC had a 45-day window to file for an en banc court hearing, a proceeding where all court judges convene to make a collective decision, as opposed to having a single judge or a small panel of judges preside over the case.
Uncertainty Surrounding Grayscale ETF Approval
The SEC’s decision not to challenge the August court ruling offers the financial watchdog the opportunity to review Grayscale’s application. However, this does not guarantee the endorsement of the much-anticipated spot Bitcoin ETF within the United States.
Furthermore, Jennifer Schulp, the director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, emphasized that the lack of an appeal does not necessarily indicate a swift approval. She stated,
“It doesn’t mean that that approval is coming quickly, and it’s still not a certainty, given that the SEC could re-review and deny on different grounds, basically starting this legal battle all over again.”
The culmination of this legal battle underscores the complexity of introducing a Bitcoin ETF to the U.S. market and the continued scrutiny from regulatory authorities.