Tuesday, July 16, 2024

The United States Securities and Exchange Commission (SEC) has been ordered by the U.S. Court of Appeals for the D.C. Circuit to re-examine Grayscale’s application for a spot bitcoin exchange-traded fund (ETF). The court’s mandate, issued on October 23, 2023, requires the SEC to scrutinize Grayscale’s submitted prospectus anew. The agency now faces a pivotal decision: either approve Grayscale’s application or identify new grounds for its denial.

Legal Injunction Calls on SEC to Reevaluate Grayscale’s Bitcoin ETF Proposal

In late August, Grayscale won a significant legal battle against the SEC at the U.S. Court of Appeals for the D.C. Circuit, regarding its spot bitcoin conversion case. The company characterized the court’s decision as a “landmark advancement” in its protracted struggle with the regulatory body. Subsequent to the victory, Grayscale submitted a formal letter in September, urging the SEC to expedite the approval mechanism.

Although the SEC had the option to challenge the court’s ruling, it chose not to pursue this avenue, and internal sources indicated to the press that an appeal was not contemplated. Undeterred by this, Grayscale revised its strategy and submitted an updated S-3 filing to the SEC. Following the court’s most recent order, the SEC is now obliged to reassess Grayscale’s application and either authorize it or decline it based on new criteria.

The SEC’s obligations are not limited to Grayscale’s application. The commission also has to review nearly a dozen other applications for spot bitcoin ETFs, submitted by prominent financial entities such as Blackrock, Fidelity, Invesco, and Franklin Templeton. Concurrently, Eric Balchunas, the lead analyst at Bloomberg Intelligence, disclosed on social media platform X that the Depository Trust & Clearing Corporation (DTCC) has listed the Ishares Bitcoin Trust under the ticker symbol “IBTC.”

In the wake of these developments concerning Grayscale and the DTCC’s listing of IBTC, the value of bitcoin experienced a significant increase, approaching $31,800. Regarding GBTC, its shares have seen a positive adjustment in relation to the discount to its net asset value (NAV). Contrasting sharply with a steep 48% discount observed ten months ago, the discount narrowed to a modest 11.03% as of October 20, 2023, according to data from ycharts.com.

The comments section below is open for discussion on the recent court mandate. Kindly share your insights and perspectives on this matter.

Frequently Asked Questions (FAQs) about SEC Grayscale Bitcoin ETF Court Mandate

What is the core issue surrounding the Grayscale’s application for a Bitcoin ETF?

The United States Securities and Exchange Commission (SEC) has been mandated by the U.S. Court of Appeals for the D.C. Circuit to reconsider Grayscale’s application for a spot Bitcoin exchange-traded fund (ETF). The SEC must either approve the application or provide new reasons for its rejection.

Who ordered the SEC to re-evaluate Grayscale’s Bitcoin ETF application?

The U.S. Court of Appeals for the D.C. Circuit issued a mandate on October 23, 2023, directing the SEC to revisit Grayscale’s submitted prospectus and make a new decision regarding its spot Bitcoin ETF application.

Are there other Bitcoin ETF applications under review by the SEC?

Yes, the SEC has nearly a dozen other spot Bitcoin ETF applications that it needs to evaluate. These include submissions from major financial institutions like Blackrock, Fidelity, Invesco, and Franklin Templeton.

What was Grayscale’s reaction to the initial court victory in late August?

Grayscale viewed the court’s decision in late August as a “landmark advancement” in its ongoing legal struggle with the SEC. Following this, the company urged the SEC in September to speed up the approval process through a formal letter.

Was an appeal contemplated by the SEC after the initial court decision?

Internal sources revealed to the media that the SEC had no plans to appeal the court’s decision. Instead, the regulatory body is now obliged to re-examine Grayscale’s revised S-3 filing following the court’s latest directive.

What has been the market reaction following these legal and regulatory developments?

After the court’s mandate and the listing of Ishares Bitcoin Trust by the Depository Trust & Clearing Corporation (DTCC), the value of Bitcoin rose significantly, nearing $31,800. Additionally, Grayscale’s own shares (GBTC) saw a positive adjustment in their discount to net asset value (NAV), shrinking from 48% ten months ago to 11.03% as of October 20, 2023.

What is the next course of action for the SEC?

The SEC is required to revisit Grayscale’s application and make a decision. They must either greenlight the application or reject it based on new, well-founded reasons.

More about SEC Grayscale Bitcoin ETF Court Mandate

  • U.S. Securities and Exchange Commission
  • Grayscale’s Official Website
  • U.S. Court of Appeals for the D.C. Circuit
  • Bloomberg Intelligence
  • Depository Trust & Clearing Corporation (DTCC)
  • ycharts.com: GBTC Discount to NAV Data

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