Yello Paradisers! The U.S. Court of Appeals for the D.C. Circuit has issued a mandate, reinforcing its August decision, directing the Securities and Exchange Commission (SEC) to re-evaluate Grayscale Investments’ proposal to transform its flagship GBTC fund into a spot bitcoin ETF.
This anticipated procedural step comes after the SEC’s recent declaration that it would not challenge the court’s ruling. Although Grayscale has since submitted a new application for the fund, there’s uncertainty regarding whether the SEC might find another reason to decline the request.
📰Background of the Ruling
The court’s mandate emphasizes its previous August verdict, which scrutinized the SEC’s approach towards spot bitcoin ETFs in comparison to bitcoin futures ETFs. The court recognized that Grayscale’s proposed bitcoin ETF mirrored the characteristics of the already sanctioned bitcoin futures ETFs. Hence, it should equally be capable of identifying any fraudulent or manipulative activities in the bitcoin and bitcoin futures market.
📰Grayscale’s Next Steps
Grayscale has taken proactive measures by submitting a new registration statement via an S-3 filing, a concise version of the standard S-1 filing utilized for new share offerings. The GBTC aims to list its shares on NYSE Arca under the ticker “GBTC” and plans to issue these shares continuously upon the approval of its S-3 form and a separate 19b-4 filing from NYSE Arca.
📰Other Contenders and SEC’s Stance
Prominent asset managers, including BlackRock and Fidelity, are also in the race to obtain the SEC’s approval for spot bitcoin ETFs. SEC Chair, Gary Gensler, mentioned that the agency is currently reviewing multiple such filings. However, he refrained from commenting specifically on Grayscale’s case.
Gensler elaborated on the process, stating that when asset managers aim to introduce something to the public, these exchange-traded products must register with the SEC. This procedure is somewhat akin to an IPO. The SEC’s Disclosure Review Team, along with other divisions, examines these filings, ensuring a rigorous and time-tested process that spans decades.
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