SEC won’t Challenge Court Ruling on Grayscale Bitcoin ETF
Grayscale Bitcoin Trust, GBTC, sees high chances of converting into a spot Bitcoin ETF as SEC refrains from challenging the federal court's decision, with industry observers suggesting a significant trend towards approval of spot Bitcoin ETFs.
The U.S. Securities and Exchange Commission (SEC) has reportedly decided against appealing a court ruling relating to Grayscale’s flagship product, the Grayscale Bitcoin Trust (GBTC). Last year, Grayscale challenged the SEC’s refusal to endorse its proposal to transform the GBTC into a spot market Bitcoin ETF. The federal court instructed the SEC to reevaluate Grayscale’s application to avoid inconsistency and arbitrariness.
Spot Bitcoin ETFs allow investors to gain exposure to the largest cryptocurrency by market cap without the need to actually own Bitcoin. All eyes are currently on Grayscale as they are closer than ever to converting GBTC into a spot Bitcoin ETF, paving ways for other firms in the race.
Grayscale’s GBTC isn’t the only product buoyed by these developments. Several prominent investment firms including BlackRock, Invesco, and Fidelity have filed applications for a spot Bitcoin ETF. BlackRock’s ex-managing director, Martin Bednall predicts that the SEC will likely approve all spot Bitcoin ETF applications simultaneously, to prevent any firm from getting the first-mover advantage.
Supporting Bednall’s prediction, recent market dynamics for Grayscale’s GBTC show a significant shift. GBTC’s discount to Bitcoin’s net asset value (NAV) has dipped to 15.87% as of October 13, its lowest level in nearly two years.
The discount to NAV indicates how much an asset trades below its actual value. This metric began to narrow mid-June when BlackRock and several other institutions filed their spot Bitcoin ETF applications. Since then, the figure has continued to drop from 44% to its current rate.
Market watchers believe this trend suggests that the financial markets are pricing in the approval of spot Bitcoin ETFs by the end of the year. Cryptocurrency investor Lyle Pratt also suggested that GBTC’s shrinking discount is likely to “evaporate” within the coming weeks as spot Bitcoin ETFs near approval.
Since the conception of cryptocurrency, the creation of a Bitcoin ETF has been a hotly debated topic. It has been widely seen as a milestone that would infuse a new level of legitimacy into the cryptocurrency space. With the SEC opting not to appeal the court ruling, and firms like Grayscale pushing ahead, it seems the industry is inching closer to this landmark development.
