Anticipation is building as a DC court prepares to release a mandate this Friday, potentially marking a significant milestone in the journey toward a Bitcoin exchange-traded fund (ETF).
This development follows a positive August opinion that favored Grayscale Investments LLC in its legal battle against the US Securities and Exchange Commission (SEC) as it seeks to convert its Bitcoin Trust (GBTC) into an ETF.
Bloomberg Intelligence analysts Elliott Stein and James Seyffart highlight that this decision is eagerly awaited, as it comes after the SEC chose not to appeal the previous ruling.
The potential approval of Grayscale’s conversion application could bring greater clarity to the ETF approval process, which has been somewhat enigmatic, causing industry observers to speculate on how the SEC will manage this emerging asset class and the numerous pending ETF applications.
Cryptocurrency investor Michael Novogratz has recently expressed optimism about the SEC approving a Bitcoin ETF this year.
Grayscale has argued that converting GBTC into an ETF could unlock significant value for its investors.
The industry was invigorated by Grayscale’s legal victory, fueling hope within the digital assets community that a Bitcoin ETF may finally become a reality in the United States after a protracted decade-long struggle with regulatory challenges.
Previously, the SEC had been cautious about approving Bitcoin ETFs, but the landscape has shifted, with several companies, including BlackRock Inc. and Invesco, actively pursuing the launch of such products. Galaxy Digital, headed by Michael Novogratz, is partnering with Invesco in a joint proposal.
Bloomberg Intelligence speculates that the most likely outcome of this race is the simultaneous approval of Grayscale’s application alongside those of other issuers, such as BlackRock.
This view aligns with ARK Investment Management’s Cathie Wood, who has recently suggested that the SEC might greenlight multiple applications simultaneously.
The excitement surrounding Grayscale’s conversion process has contributed to a rally in its Bitcoin trust. Currently, GBTC is trading at approximately 14% below the value of its underlying assets, marking the narrowest discount seen since 2021.
This significantly improved from the nearly 50% discount earlier this year. The trust’s shares have more than doubled in value in the current year, reflecting the positive sentiment surrounding the potential approval of a Bitcoin ETF.