The U.S. Securities and Exchange Commission (SEC) has chosen not to pursue an appeal in a significant legal case regarding Grayscale Investments’ endeavor to transform its flagship fund into a spot bitcoin exchange-traded fund (ETF). According to an inside source cited by Reuters, the SEC’s decision to forgo an appeal was made before a midnight deadline.
Earlier in the day, SEC Chair Gary Gensler refrained from commenting on the potential appeal during a press conference, keeping the industry in suspense regarding the regulatory stance.
In August, a three-judge panel in the U.S. Court of Appeals for the D.C. Circuit ruled that the SEC must reevaluate Grayscale’s application for a spot bitcoin ETF after the asset management company had filed a lawsuit against the agency. This legal action followed the SEC’s rejection of Grayscale’s proposal to convert its flagship GBTC fund into a spot bitcoin ETF.
The SEC’s reported move to forgo appealing the court’s decision on Grayscale’s spot bitcoin ETF conversion could provide a boost to industry confidence. Yet, it’s crucial to consider the warnings from experts like Jennifer Schulp, Director of Financial Regulation Studies at the Cato Institute, who stress that approval is not a guaranteed outcome. Schulp points out that the SEC maintains the power to reevaluate the proposal from a different perspective, potentially leading to a renewed legal dispute. Therefore, the path to a spot bitcoin ETF remains uncertain despite these recent developments.