Grayscale’s victory in the courts against the Securities and Exchange Commission (SEC) has significantly increased the probability of a bitcoin exchange-traded fund (ETF) being approved in the United States. Financial specialists James Seyffart and Eric Balchunas believe that there is a 75% chance of approval, and this likelihood is expected to rise to 94% by the end of 2024. The judges ruled that Grayscale’s proposed bitcoin ETF is similar to already-approved bitcoin futures ETFs.
Earlier in August, Seyffart and Balchunas had predicted a 65% chance of approval. However, the SEC had previously denied Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) fund into a spot bitcoin ETF in 2022, leading the investment firm to file a lawsuit against the regulator.
Seyffart believes that the SEC’s response to other ETF applications, scheduled between September 1 and 4, may be delayed, and the probability of approval for these applications is currently low. The ETF applicant companies waiting for SEC approval include BlackRock, 21Shares & ARK, Bitwise, VanEck, Wisdomtree, Invesco, Fidelity, Valkyrie, and Grayscale.
In terms of actions the SEC can take to control ETFs, Seyffart suggests that approving the conversion of Grayscale’s fund to a bitcoin ETF is the first option. However, if the SEC wants to oppose these initiatives, there are two options. The first is to revoke the listing of bitcoin futures ETFs, although Seyffart believes this is unlikely to happen. The second option is to deny ETF applications using reasons that have not been used before, potentially related to custody or settlement of bitcoins.
Overall, the recent court ruling in favor of Grayscale has increased the likelihood of a bitcoin ETF being approved in the US. The decision has left the SEC with limited leeway, and experts predict a positive outcome for the investment firm and other ETF applicants.