BTC has given back almost all of the gains inspired by Grayscale’s recent victory over the U.S. Securities and Exchange Commission (SEC), where a federal court ordered the securities regulator to vacate and then reconsider its decision to deny a proposed spot BTC exchange-traded product (ETP).
The backslide was caused by SEC filings made on August 31, in which the agency told seven entities with outstanding BTC ETP applications that it was delaying its decisions by 45 days, as it is entitled to do under the Securities Exchange Act.
“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” the filings read.
|Application||New SEC decision deadline|
|Valkyrie||October 19, 2023|
|iShares||October 17. 2023|
|WisdomTree||October 17, 2023|
|BlackRock||October 17, 2023|
|Invesco Galaxy||October 17, 2023|
|VanEck||October 17, 2023|
|Bitwise||October 16, 2023|
Other outstanding applications, such as that from Fidelity, have yet to be delayed.
Such market whiplash likely reflects an initial expectation from speculators that the Grayscale victory would force the SEC to change its position that spot Bitcoin ETPs represent an unacceptable risk of fraud and manipulation. The reality is that the SEC is only obliged to go back and make the decision with an acceptable justification—if possible.
The key takeaway from Grayscale’s victory over the SEC is that the court is not convinced that the SEC’s reasoning for treating spot ETPs differently from the futures ETPs already approved is sufficient under the Administrative Procedure Act (APA). Unless the SEC can better justify why spot BTC ETPs should be treated differently from BTC futures ETPs, the courts will likely continue to find that the SEC rejections are arbitrary and capricious under the APA.
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