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SEC Misses Grayscale ETF Appeal Deadline

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Bloomberg – Grayscale, a company that manages cryptocurrency assets, wanted to change its bitcoin trust into something called a spot bitcoin exchange-traded fund (ETF). An ETF is like a basket of stocks or bonds, but in this case, it would be a basket of bitcoins. This would allow people to invest in bitcoin without actually owning any.

The U.S. Securities and Exchange Commission (SEC), which is like the police for financial markets, said no to Grayscale’s plan. Grayscale didn’t agree with this and took the SEC to court. The court decided that the SEC was wrong to say no. The SEC had 45 days to challenge the court’s decision, but they didn’t. This means that Grayscale might have a chance to change its bitcoin trust into an ETF after all.

Grayscale argued that the SEC had allowed similar things in the past. For example, they had approved agreements to prevent fraud in bitcoin futures ETFs. (Bitcoin futures are contracts to buy or sell bitcoin at a future date at an agreed price). Grayscale said that if the SEC could approve these, they should also approve their spot bitcoin ETF. The SEC has allowed ETFs for bitcoin futures before but has not yet allowed any spot bitcoin ETFs. They have been considering several applications for spot bitcoin ETFs this year, including one from Blackrock, a big financial company.

The SEC has delayed making decisions on many of these applications. They have until next year to decide. In Grayscale’s case, the court will give instructions on what should happen next. This might include telling the SEC to look at Grayscale’s application again.

  • 14 October 2023
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