Upcoming Milestones: SEC Prepares to Evaluate Approval for 7 Bitcoin ETFs in the Upcoming Week

The United States Securities and Exchange Commission (SEC) is on the verge of a significant moment as it approaches crucial decision deadlines concerning seven applications for spot Bitcoin exchange-traded funds (ETFs). This critical evaluation comes on the heels of the SEC’s recent court defeat to Grayscale Investments in a U.S. federal appeals court, marking a pivotal juncture in the realm of cryptocurrency exchange-traded funds.

As the upcoming week unfolds, the investment world will be closely watching. Investment firm Bitwise’s ETF application is slated for the SEC’s verdict on September 1, while a slew of other industry giants, including BlackRock, VanEck, Fidelity, Invesco, and Wisdomtree, anticipate the SEC’s decision on their respective ETFs by September 2, as indicated by various SEC filings. Valkyrie, another notable player, is set to receive the SEC’s response on September 4.

The August 29 ruling by the U.S. Court of Appeals resonated widely, deeming the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF as “arbitrary and capricious.” It’s important to note, however, that this favorable outcome for Grayscale does not necessarily dictate automatic approval for its application or others of its kind in the future. Bloomberg ETF analyst James Seyffart clarified that while Grayscale’s victory certainly enhances the prospects for subsequent applicants, it does not guarantee universal success moving forward.

Seyffart acknowledged that the timeline for such approvals remains uncertain, given the SEC’s discretionary power to delay decisions. The regulatory body has two additional proposed deadlines for each fund before a final ruling must be made on the 240th day post-filing. For the hopeful ETF applicants, these ultimate deadlines with the SEC are all centered around mid-March of the following year.

In the aftermath of the Grayscale decision, the SEC is now presented with several paths to take. The regulatory body has a 90-day window to either file an appeal with the U.S. Supreme Court or seek an en banc review, whereby a full circuit court can potentially overturn the verdict delivered by a three-judge panel.

The forthcoming steps for the SEC remain shrouded in uncertainty. Should the SEC choose not to appeal, the court will need to outline the execution of its ruling. This could entail instructing the SEC to approve Grayscale’s application or, at the very least, reevaluate it.

Two primary courses of action seem viable according to Seyffart: The SEC could concede and grant approval for Grayscale’s conversion of GBTC into a Bitcoin spot ETF, or it might consider revoking the listing of Bitcoin futures ETFs entirely or reject Grayscale’s application based on novel arguments.

While fellow Bloomberg ETF analyst Eric Balchunas deems the latter scenario of the SEC revoking Bitcoin futures ETFs as “highly unlikely,” the evolving landscape suggests a complex interplay between regulatory stance and the rapidly advancing world of cryptocurrency investment vehicles.

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