The SEC and Grayscale are discussing the Bitcoin ETF. Is the day of approval still far away?

Source: BeInCrypto

Compiled by: Blockchain Knight

The U.S. Securities and Exchange Commission (SEC) has begun discussions with Grayscale. Reports indicate that they are discussing whether to convert the Grayscale BTC Trust (GBTC) into a spot BTC ETF.

This move follows Grayscale's recent victory over the SEC in court and could have a significant impact on the crypto market. In fact, it would facilitate access to BTC for ordinary investors.

Grayscale is in dialogue with the SEC's trading and markets division as well as the corporate finance division, following a ruling by a U.S. federal court that the SEC's initial rejection of Grayscale's ETF application was "arbitrary and capricious."

The court's decision has reignited the possibility of approval for a spot BTC ETF, and Grayscale's application is back under SEC review.

Grayscale's Chief Legal Officer Craig Salm emphasized that the company will re-emphasize communication with the trading and markets division. He acknowledged that challenges exist but maintained an optimistic outlook. Salm also mentioned the progress made by financial giants like BlackRock and Fidelity regarding their BTC ETF applications.

Salm stated, "Right now, we are just focused on constructive re-engagement with the trading and markets division, and there are some things that need to be resolved. Overall, our engagement has been smooth; it's just a matter of time, no longer a question of 'if.'"

The SEC has not publicly commented on the new talks, but it faces heightened expectations and scrutiny.

SEC Chairman Gary Gensler has also refrained from commenting on Grayscale's application recently. However, he emphasized the work that the agency's finance division needs to do in response to evolving technologies and business models, which will play a central role in evaluating Grayscale's application.

Gensler said, "I won't prejudge the staff's work on multiple ETF filings, but this also relates to these companies. When a company or an asset management firm seeks to list, these exchange-traded products need to be registered with the SEC, and the filing process they undergo is similar to an IPO."

According to Bloomberg ETF analyst James Seyffart and Bloomberg Intelligence Senior ETF Analyst Eric Balchunas, the approval window for all pending spot BTC ETFs is about to open. They believe that even if approval is not granted this month, there is a 90% chance that a BTC ETF will be approved by January 10, 2024.

Seyffart stated, "The SEC has also issued delays for applicants like BlackRock, WisdomTree, and Fidelity. If the agency wants to allow all 12 applicants to list (as we believe), this is the first available window since Grayscale's victory was confirmed."

Meanwhile, JPMorgan pointed out that if the SEC fails to approve these applications, it may face lawsuits, and even some policy experts have criticized the commission for overstepping its authority.

Among the 12 applicants for a spot BTC ETF, BlackRock seems to have generated significant interest from investors.

BlackRock manages $8.5 trillion in assets, and analysts speculate that if the BlackRock BTC ETF is approved, it could inject $155 billion into BTC, a massive influx of funds that could push BTC's price up to $330,000.

Blockchain analytics firm CryptoQuant reported, "We can expect that once these ETFs are approved, there will be $155 billion flowing into the BTC market. The total assets under management (AUM) of these companies is approximately $15.6 trillion. If they allocate 1% of their AUM to these BTC ETFs, that would result in $155 billion flowing into the BTC market, which is nearly one-third of BTC's current market capitalization."