Grayscale Verdict May Pave Way For BlackRock’s Spot BTC ETF

The outcome of the Grayscale vs SEC Bitcoin ETF case may pave the way for BlackRock's spot BTC ETF application to be approved

Bloomberg senior Exchange Traded Fund (ETF) analyst Eric Balchunas believes that popular investment asset management firm BlackRock stands a 50% chance of receiving an approval from the United States Securities and Exchange Commission (SEC) for its application for a spot Bitcoin (BTC) ETF

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His prediction was tied to the observation made by senior litigation analyst for Bloomberg Intelligence Elliott Stein on the Grayscale vs SEC case.

Grayscale Application For Spot Bitcoin ETF Meet Roadblock

Grayscale applied to the SEC to transform its Grayscale Bitcoin Trust (GBTC) into a spot ETF in October 2021. At first, the regulator delayed its response citing certain concerns about market manipulation, liquidity and transparency. 

The SEC sought public opinion concerning the matter and gave interested parties up to 3 weeks to submit their written responses. This pushed Grayscale to begin to prepare to file a complaint against the SEC. In the end, the application was rejected.

Grayscale Sue SEC Over BTC ETF Rejection

The asset manager filed its first appeal against the regulator with the United States Court of Appeals for the District of Columbia Circuit. Donald Verrilli Jr., a top solicitor that worked with President Barack Obama was hired to work with Grayscale’s legal team in preparation for the lawsuit.

Michael Sonnenshein, Grayscale Chief Executive Officer (CEO) said, “Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation – and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot bitcoin ETFs from coming to the U.S. market.” 

Since then, the case has been ongoing but now Stein believes that Grayscale has a 70% chance of winning the case. If this happens, it is very likely that the SEC would approve BlackRock’s application to save face. So instead of allowing an ETF from Grayscale, the regulator will rather permit an ETF from a “trusted ‘adult’ TradFi” firm.

Spot BTC ETF Application Turns Rat Race

The listing of a spot Bitcoin (BTC) ETF has translated into a contest which has many investment asset management firms running helter-skelter. 

WisdomTree has reapplied to the SEC for a spot BTC ETF. This would see the WisdomTree BTC Trust listed on Cboe BZX Exchange under the ticker BTCW. The Delaware-based subsidiary of Valkyrie Investments Inc. has filed an updated spot BTC ETF

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