02 Sep, 2023

SEC Extends Deadline for Approval of 7 Bitcoin ETFs to October

sec deadline

TL;DR

  • U.S. SEC faces crucial decisions on Bitcoin ETFs after being legally defeated by Grayscale.
  • Originally set for September, the SEC’s decisions on 7 ETF applications have now been postponed to between Oct. 16 and Oct. 19.

SEC faces Crucial Decision after Grayscale’s victory

The U.S. Securities and Exchange Commission is at a critical juncture in the crypto world. SEC recently received a lawsuit defeat against Grayscale Investments in a U.S. federal court of appeals. 

Now, it has to decide on the approval of 7 bitcoin ETFs. The first deadline to evaluate all these 7 applications was originally before the 4th of September.

Pending ETF Application Decisions Delayed

Originally, according to official SEC filings, Bitwise was set to receive a decision about its ETF on September 1st.

Likewise, BlackRock, VanEck, Fidelity, Invesco, and WisdomTree expected the SEC’s verdict on their funds by September 2nd.

Additionally, Valkyrie was poised for an SEC decision on September 4th.

However, these dates have now been pushed back to between 16th and 19th October, prolonging the anticipation for these investment firms and affecting market sentiment.

1st deadline approaches for SEC for approval of 7 bitcoin ETFs
1st deadline approaches for SEC for approval of 7 bitcoin ETFs.

On August 29, the U.S. Court of Appeals considered it arbitrary to reject Grayscale’s application to turn Grayscale Bitcoin Trust (GBTC) into the Bitcoin ETF

The After-Effects of Appeals Court Verdict

In an interview, James Seyffart, the Bloomberg ETF analyst, noted that Grayscale’s victory has surely increased the odds. But it doesn’t mean the SEC will approve all the wave of applications. 

First, they would have to revoke the listing of Bitcoin Futures ETFs. The order here from the DC Circuit basically said you can’t argue about the manipulation of markets while allowing Bitcoin futures ETFs. I still think this is quite unlikely…

James Seyffart, Research Analyst @Boomerang Intelligence 

He further pointed out that the SEC can use their right to delay the decisions further. After filing, they can have two more proposed deadlines before the 240th day. 

That has ultimately delayed the final decisions for the awaiting applicants till mid-March of the next year.

After Grayscale’s decision, there are only two possibilities for SEC:

The first is to admit its defeat and approve the conversion of Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot ETF. 

The second option is to reject this application of Grayscale based on new arguments. The latter option seems less likely to happen. 

Options for SEC post Grayscale decision

SEC’s stance on such applications is now unknown after the appeals court decision. SEC said that it will review its options after the Grayscale verdict

It has 90 days to challenge the latest decision in the U.S. Supreme Court. It can also appeal for an en banc review, which refers to a special procedure where all judges of a particular court hear a case.

In case of an en banc review, the full circuit court will review the decision made by the panel of 3 judges.

SEC options after Grayscale defeat
SEC options after Grayscale defeat.

If the SEC opts not to appeal against the decision, the court will explain the implementation process. It is believed that the SEC is in favor of Ethereum futures ETFs. So, it’s highly unlikely to revoke Bitcoin’s future ETFs. 

So, the SEC’s decision-making will involve carefully considering market factors, legal aspects, and regulatory outlooks.

The cryptocurrency market closely monitors the SEC’s stance on the court decision. Their response can be crucial in determining the crypto regulations in the U.S.

What decisions do you think the SEC will make in October?