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Greyscale Takes Lead in Brining First Bitcoin ETF: Here is the Roadmap

Last Updated August 30, 2023 2:20 PM
Omar Elorfaly
Last Updated August 30, 2023 2:20 PM

Key Takeaways

  • Judges ruled in favor of Grayscale in ETF Case.
  • SEC has to consider all ETF applications.
  • Cyrpto market may change soon.
  • When to expect SEC’s response to key ETF applications.

The US Securities and Exchange Commission (SEC) has not yet approved any spot ETF applications filed by numerous Wall Street financial institutions.

Among the most notable applications are those from the world’s largest asset manager, BlackRock, as well as from Grayscale and Cathie Wood’s Ark Invest.

In a landmark ruling, a three-judge panel of the District of Columbia Court of Appeals ruled that the SEC had failed to provide clear reasoning when rejecting Grayscale’s ETF application and must now review its decision.

The SEC has 45 days to appeal the ruling. If it fails to do so, the commission would be expected to offer clear and timely responses to all related ETF applications submitted by firms like BlackRock.

Wall Street ETFs

Grayscale was the first among Wall Street names to apply for a spot ETF with the SEC. In 2013, Grayscale licensed its Bitcoin Investment Trust (GBTC) and then received FINRA approval for eligible shares to go public.

Grayscale applied to convert GBTC into a Bitcoin spot ETF in October 2017. Following remarks from the authority, the company withdrew its application, only to refile it again in 2021, after addressing SEC’s concerns regarding anti-money laundering and anti-market manipulation measures.

After almost a year, Grayscale received a rejection from the commission. However, the SEC’s response lacked any valid reasoning for its decision.

Multiple Wall Street ETF applications now await a response from the SEC, including ones from BlackRock, Fidelity, and ARK Invest.

As a result of a panel of US District Judges ruling, the SEC may now be forced to respond to each ETF application with elaborate reasoning within specified timelines.

BlackRock’s Bitcoin Spot ETF

BlackRock CEO, Larry Fink, said the company is trying to “democratize crypto” as it first filed for its iShares Bitcoin Trust in June. The move received positive reactions from stakeholders all over the sector.

Galaxy Digital CEO, Mike Novogratz, said , “BlackRock getting a $BTC ETF through would be the best thing that could happen to $BTC.”

Satoshi Roundtable host Bruce Fenton also said , “It’s a big deal that a company the size of Blackrock is signaling such a major interest in this asset at this time.”

The company’s ETF application fueled market optimism, bringing Bitcoin to rise by $4,000 in a few hours. BlackRock is famous for getting approval on almost all of its prior ETF applications.

The announcement also prompted many Wall Street financial institutions to follow suit and apply for their own spot ETFs, among them Fidelity.

In July, BlackRock resubmitted its ETF application managed by the NASDAQ exchange to the SEC to meet the regulating body’s anti-money laundering conditions according to the Surveillance-Sharing Agreement (SSA).

BlackRock named Coinbase, the biggest US-based crypto exchange as a surveillance partner on its application.

ARK Invest

Cathie Wood’s investment management firm, with $50 billion in assets under management, followed BlackRock’s lead to refile its own ETF application and include its own SSA in partnership with Coinbase.

ARK’s filing stated that “the Spot BTC SSA is expected to be a bilateral surveillance-sharing agreement between the Exchange and the US BTC Spot Market Platform that is intended to supplement the Exchange’s market surveillance program.”

“The Spot BTC SSA is expected to have the hallmarks of a surveillance-sharing agreement between two members of the ISG, which would give the Exchange supplemental access to data regarding spot Bitcoin trades on the US BTC Spot Market Platform, if the Exchange determines it is necessary as part of its surveillance program for the Commodity-Based Trust Shares.”

Although at first optimistic about her company being the first to receive SEC approval, CEO Cathie Woods now believes that the SEC will approve a group of ETF applications at once, including her own company’s.

“I think the SEC, if it’s going to approve a Bitcoin ETF, will approve more than one at once,” said Woods.

Novogratz also believes that SEC ETF approval should arrive within four to six months, and it’s not a matter of ‘if’, but ‘when’.

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