The crypto industry experienced another enormous victory, as reported by broker Bernstein, with the federal court compelling the U.S. Securities and Exchange Commission (SEC) to reconsider its earlier denial of Grayscale‘s application to convert the Grayscale Bitcoin Trust (GBTC) into an Exchange Traded Fund (ETF). This decision trails closely behind last month’s ruling in favor of Ripple, marking it as a second industry win in the legal arena.
The court ruling paves a potentially smoother path towards the adoption of a spot Bitcoin ETF. An ETF is a kind of investment vehicle traded on an exchange that mirrors the performance of a specific asset – in this case, bitcoin. The appeal of ETFs in the burgeoning crypto market arises from the ability they provide investors to delve into cryptocurrency investments minus the need to procure the digital assets themselves.
While intensifying the likelihood of the SEC approving all current applications collectively, the ruling does not immediately greenlight for the GBTC to transform into an ETF. It does, though, provide groundwork for Grayscale to receive similar treatment to other applicants aiming to launch Bitcoin ETFs.
Expected approval timelines for this new wave of applications could begin as early as next week for the preliminary examination and extend into early 2024 for the final SEC inspection.
The introduction of a spot bitcoin ETF into the market is anticipated to wield considerable significance, with Bernstein projecting that it could capture up to 10% of bitcoin’s market capitalisation within a tight timeframe of two to three years.
But here’s where a note of scepticism may be worthwhile. While the potential of an ETF for investors is indeed compelling, detractors might argue that this might lead to a flurry of enthusiasm and frantic trading, potentially destabilising the market. Moreover, considering the SEC’s history of reluctance towards the crypto industry, it might be wise not to get hope so high on speedy approval processes.
One thing, however, cannot be denied: these legal wins, no matter how incremental they may seem, do hold a great deal of significance for the crypto industry. This isn’t just about an ETF. It’s about a growing acceptance and official recognition of cryptocurrency and its potential role in our financial future. The landscape is changing – and potentially faster than we might think.