
The SEC is in a tricky situation after the U.S. Court of Appeals for the D.C. Circuit sided with Grayscale in a lawsuit against them, increasing the odds of an eventual bitcoin exchange traded fund (ETF). This ruling directly challenged the SEC's previous reasoning of denying a spot bitcoin ETF due to the lack of a regulated crypto market of sufficient size to prevent manipulation. The court noted that the Commission had already approved a futures-based bitcoin product, and in essence stated that if one was approved, the other must also be considered. Despite this potentially promising news, the manipulation concern is still present.
Where to now? It all comes down to whether SEC Chair Gary Gensler wants to continue the fight, or give in. They have 45 days to decide whether to appeal the case. Should they decide to appeal, the order will be delayed until a decision is made. If not, then they have the choice to approve all/ some of the nine applications for a spot bitcoin ETF, delay as long as the law allows, or come up with a new rationale to deny it, and risk another lawsuit. The SEC could also opt to kill the bitcoin futures ETF, but this is considered unlikely given their recent approval of it.
Matt Hougan, Chief Investment Officer for Bitwise Asset Management, will appear on ETF Edge on Halftime Report Wednesday. During the 2:00 PM ET segment, he will be accompanied by Craig Salm, Grayscale's chief legal officer, and Jeremy I. Senderowicz, an attorney with VedderPrice with extensive experience in ETFs.
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