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Bitcoin ETFs: SEC’s Gensler Takes New Approach

Last Updated December 15, 2023 11:50 AM
Teuta Franjkovic
Last Updated December 15, 2023 11:50 AM

Key Takeaways

  • SEC Chairman Gary Gensler has indicated that he may be reconsidering his approach to spot Bitcoin ETFs.
  • Grayscale’s victory over the SEC could make it more likely that the agency will approve its spot Bitcoin ETF application.
  • Several asset management firms are vying for approval to launch a spot Bitcoin ETF.

Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), recently indicated  that the regulator might be reconsidering its approach to spot Bitcoin exchange-traded products (ETPs).

This statement comes in the wake of a court decision  involving Grayscale, a major player in the cryptocurrency investment space.

Will Gensler Open Door to Spot Bitcoin ETFs?

During the interview on December 14th, Gensler was asked about the numerous pending applications for spot Bitcoin exchange-traded funds (ETFs).

He revealed  that the SEC is currently processing “between eight and a dozen filings” for such ETFs. This acknowledgment suggests the SEC is actively evaluating these applications. This could signal a potential shift in its regulatory stance toward spot Bitcoin ETFs.

Grayscale’s Victory Over SEC Prompts Regulatory Reconsideration

Gensler acknowledged  that the SEC had previously denied several applications for spot Bitcoin exchange-traded funds (ETFs). He then mentioned that the courts have had an input on these denials. Following this, Gensler hinted at a possible shift in the SEC’s approach towards Bitcoin, indicating that the agency might be reconsidering its previous stance on the approval of Bitcoin ETFs.

He said: “We’re taking a new look at this based upon those court rulings.”

News anchor Sara Eisen inquired if he was alluding to Grayscale. Gensler sidestepped the query, emphasizing that the SEC operates “within the confines of legislation enacted by Congress and judicial interpretations thereof”.

While the SEC is currently involved in ongoing cases with Binance and Coinbase, it appears that he could have been talking about Grayscale. Earlier in the year, Grayscale achieved a victory over the regulatory body when a group of judges ruled in favor of the cryptocurrency-oriented asset manager. This decision compelled the SEC to reevaluate Grayscale’s application for converting its Bitcoin trust (GBTC) into an ETF.

Grayscale has stated its intention to cooperate closely and promptly with the SEC to secure the necessary regulatory approval.

 

What’s Next for Grayscale?

The introduction of a Grayscale ETF would place the firm among other contenders striving to launch a bitcoin ETF, a race that even traditional asset managers like BlackRock have joined, aiming to be among the pioneers in this field.

Currently, there is considerable optimism regarding the ETF verdict. Bloomberg ananlyst James Seyffart has provided  a more precise timeline for a potential decision. The SEC has a deadline of January 10 to rule on the joint proposal from Ark and 21Shares, focusing attention on the days leading up to this date.

Bloomberg analysts estimate the probability of approval by the January deadline at about 90%. However, this optimistic view is not shared across the board. Former SEC employee John Reed Stark  said such high expectations were “absurd.”

Top Asset Managers Vie for Bitcoin ETF Approval

Numerous prominent asset management firms, such as BlackRock, Fidelity, Grayscale, Invesco, Galaxy, VanEck, and Valkyrie, are currently competing to launch a direct Bitcoin ETF. Although all their applications are postponed, some analysts remain optimistic about a collective approval in early January 2024.

Additionally, Bitcoin ETF applicants might need to adapt to a cash redemption model.

Previously, Gensler also avoided direct responses to questions about the volume of submissions for direct Bitcoin products. He instead shifted the discussion towards recent modifications in the U.S. treasury market, highlighting these as the agency’s current top priorities.

Regarding this, U.S. Representative Bryan Steil commented on Twitter:

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