SEC Ordered to Re-Evaluate Grayscale's Bitcoin ETF Conversion With Court Mandate

The U.S. Securities and Exchange Commission (SEC) once again holds the reins when it comes to evaluating Grayscale’s spot bitcoin exchange-traded fund (ETF) application. On October 23, 2023, the U.S. Court of Appeals for the D.C. Circuit delivered a directive, compelling the SEC to take another look at the company’s prospectus. Now, the SEC stands at a crossroads: greenlight Grayscale’s proposal or pinpoint alternative reasons for rejection.

Court Mandate Urges SEC to Reassess Grayscale’s Bitcoin ETF Application

In late August, Grayscale secured a victory at the U.S. Court of Appeals for the D.C. Circuit in its spot bitcoin conversion suit against the SEC. Grayscale labeled the decision as a “monumental step” in its ongoing battle with the regulator. Not becoming complacent, the firm dispatched a letter in September, prodding the securities watchdog to accelerate the approval process.

While the SEC could have contested the ruling, they let the opportunity slip by, and insiders conveyed to the media that an appeal wasn’t on the cards. Unwavering, Grayscale refreshed its approach with an updated S-3 submission to the SEC. With the court’s latest directive, it’s back to the drawing board for the SEC; they must revisit Grayscale’s case and either give it the nod or reject it on fresh grounds.

The SEC isn’t just dealing with Grayscale; they’ve got a stack of nearly a dozen spot bitcoin ETF registration requests to sift through. This includes heavyweight financial submissions from the likes of Blackrock, Fidelity, Invesco, and Franklin Templeton. Meanwhile, on Monday, Bloomberg Intelligence’s lead analyst, Eric Balchunas, unveiled on social network X that the Depository Trust & Clearing Corporation (DTCC) had cataloged the Ishares Bitcoin Trust under the ticker “IBTC.”

Following the Grayscale revelations and the DTCC’s addition of IBTC, bitcoin’s value surged on Monday, nearing $31,800 on Monday. As for GBTC, its shares have seen an uptick concerning the discount to its net asset value (NAV). A stark contrast to the hefty 48% discount from ten months prior, it dwindled to a mere 11.03% on October 20, 2023, as per ycharts.com data.