SEC at a dead end over Bitcoin ETF verdict?

September 1ᵉʳ is the deadline given to the U.S. Securities and Exchange Commission (SEC) to rule on Bitcoin ETF applications. This is the date by which Bitwise will know whether its ETF will win SEC approval. Five other applicants will receive a response from the regulator the following day, while one will have to wait until September 04.

Some have asked whether they could revoke the bitcoin futures ETFs, highly unlikely in our view, esp given their recent openness to Ether futures ETFs. In the end, I know it and you know it and even animals know it- the best move is to just approve the damn things already. https://t.co/fZCOIur4of

— Eric Balchunas (@EricBalchunas) August 29, 2023

In brief:

• SEC to give its verdict on Bitcoin ETFs soon
• An institution still hostile to cryptos
• Towards a victory for the crypto industry?

How will the SEC respond to requests for Bitcoin ETFs?

Several major fund management companies have filed Bitcoin ETF applications with the SEC, the US stock market regulator. On August 29, the US Court of Appeals ruled that the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a Spot Bitcoin ETF was “arbitrary and capricious”. Does this defeat mean that the SEC must approve all future applications? James Seyffart, analyst at Bloomberg, made an appearance commented by Cointelegraph in which he states that this defeat at least increases the chances that pending applications will be approved.

These include 7 applications from financial giants. On September 1, the SEC is due to rule on Bitwise’s Bitcoin ETF application. On September 02, the decision on the applications of five others, namely: BlackRock, VanEck, Wisdomtree, Fidelity and Invesco. Finally, the seventh, Valkyrie, is due to receive a response from the SEC on September 4.

Can the SEC refuse to approve these Bitcoin ETFs?

Firstly, the SEC is not obliged to issue its verdict within the announced timeframe. In fact, the law gives it the option of making a final decision within 240 days of the application being filed. This means that applicants could be forced to wait until March 2024.

Secondly, the SEC could simply make things easier for itself by revoking the listing of Bitcoin futures ETFs entirely. This would be a solution that settles its conflict with GrayScale; but also with all the other companies that have made this application.

The SEC is not particularly fond of cryptocurrencies, as is now well known. Indeed, its actions and aggressiveness have prompted many crypto companies to seek refuge outside the United States. But can it go so far as to revoke the listing of Bitcoin futures ETFs entirely?