After the landmark court ruling in October regarding Grayscale’s application for converting its Grayscale Bitcoin Fund (GBTC) into an exchange-traded fund (ETF), the SEC seems to be undergoing some reconsideration.
The US Securities and Exchange Commission (SEC) is now looking at spot Bitcoin ETF applications in a new way.
The chairman
On Thursday, the chairman of the SEC, Gary Gensler, said in an interview that the agency was currently reviewing eight to 12 applications.
He stated that in the past, they had denied a number of those applications, but they were now taking a new look at them after the court ruling.
Gensler stated that as the SEC boss, he cannot prejudge anything and added that the regulatory body works under the laws Congress has passed and how they are interpreted by the courts.
Then, the SEC chair took the familiar path to criticize the crypto industry, calling it the ‘Wild West’ and highlighting the noncompliance of crypto companies with the securities law.
He also talked about the ‘bad actors and fraud’ happening in the crypto industry. He stated that they did not have fundamental information about several projects in this field.
He stated that the intermediaries of crypto exchanges are commingling funds and engaging in activities that are not permitted within the financial system.
Bitcoin ETFs
To date, the SEC has turned down every application that has been submitted for a spot bitcoin ETF. However, there are indications that a change is coming.
In October, the US Court of Appeals agreed with Grayscale’s argument that the SEC’s judgment had been ‘capricious and arbitrary’, as it had approved Bitcoin futures ETF products that had a similar structure.
Therefore, the agency was ordered to review Grayscale’s application for converting its GBTC into a Bitcoin ETF.
It was later revealed that the SEC was conducting active discussions with many companies that had submitted spot Bitcoin ETF applications.
These included BlackRock, Grayscale, and Fidelity and more recently, it had also discussed with Franklin Templeton.
BlackRock made amendments to its applications earlier this week after meeting with the SEC, which makes it easier for Wall Street banks to invest in its ETF, as crypto market makers will handle the risks.
The expectation
This has resulted in a growing sense of optimism in the crypto community about the imminent approval of a spot Bitcoin ETF.
Analysts for JPMorgan and Bloomberg have also stoked the fire, as they believe that one or more ETFs may be approved in January.
But, JPMorgan does not believe that the approval will impact the crypto market. In a recent report, it argued that it is unlikely that the crypto market would see fresh capital due to a Bitcoin ETF.
Nonetheless, others believe that approval of such an investment product would see massive funds flow into the crypto space and give the overall market a solid boost.