Will The SEC Continue Being Sceptic About GBTC To Become An ETF?

It is that time when the crypto space is moving towards a point that is propelled by various use cases and the learnings from various incidents the ecosystem has been experiencing since inception. Taking a step back to last year July, Greyscale proposed to convert its flagship spot Grayscale Bitcoin Trust (GBTC) into an ETF, a claim that was denied by the SEC on the grounds that the proposal did not cater to the standards that has been aimed at preventing fraudulent practices and protecting the investors.

The denial from the SEC had soon resulted in the Greyscale suing the SEC almost immediately with the claim that the regulator has been acting arbitrarily in rejecting applications for spot bitcoin ETFs while it had previously given approvals to bitcoin futures ETFs. The case is being heard in front of the District of Columbia Court of Appeals; as per the report from Reuters.

Cut to yesterday, the shares of the Grayscale Bitcoin Trust (GBTC) surged after the federal judges in the United States has appeared to have sided with Grayscale, the parent company, in its lawsuit against the Securities and Exchange Commission.

Read more: Bitcoin Price Prediction

What is GBTC?

GBTC is the largest publicly traded crypto fund in the world. The company also has around $14B in assets under its management. As the GBTC debuted several years ago, the institutional investors were finally presented with a way to gain exposure to the original crypto asset. The investors could exchange the Bitcoin tokens for shares in the trust along with trading those shares on the stock market! However, according to reports, looking from March 2021, the GBTC shares has traded at a discount as the crypto market were presented with various competing products. Soon GBTC lost its stranglehold over the market.

Source: Greyscale

Judges View On The Matter

On Tuesday, proceeding after the GBTC sued SEC, Grayscale lawyer and a former Solicitor General in the Obama administration, Don Verrilli said, “The fundamental problem with the order is that it contradicts previous SEC orders giving the green light to Bitcoin futures [exchange traded products] that pose the same risk of fraud and manipulation.”

As per questions stated by one of the three-judge panel who is overseeing the case, Judge Naomi Rao, “What kind of data would they have to show? You can say that they bear the burden, but seems SEC has to explain why they are wrong in the evidence they have offered.”

To answer that, as per the data from James Seyffart, a research analyst at Bloomberg Intelligence, it still needs a few months time for the date to be ready.

Also! my colleague @NYCStein believes we are likely going to be waiting 3-6 months before we get a verdict. In case anyone is wondering what the potential timeline looks like: pic.twitter.com/yNtzsAPQc4

— James Seyffart (@JSeyff) March 7, 2023

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