Grayscale’s Push for a Spot Bitcoin ETF Faces Uphill Battle Amid SEC Scrutiny

Overwhelming Support from Public Comments

In a surprising twist that feels like the plot of a summer blockbuster, Grayscale, the digital asset management giant, reported an avalanche of public support for its push to launch a spot Bitcoin exchange-traded fund (ETF). Out of more than 11,400 letters submitted to the SEC, a jaw-dropping 99.96% were in favor. Talk about being popular at the crypto party!

The Great Bitcoin ETF Debate

Many of the letters raised a crucial question: Why no spot Bitcoin ETF in the U.S., especially after the SEC gave the green light to Bitcoin futures ETFs? It’s as if the SEC tossed a pizza party for Bitcoin futures while leaving the actual Bitcoin sitting alone in the corner. Grayscale CEO, Michael Sonnenshein, stated, “The SEC’s actions over the past eight months have signaled an increased recognition of and comfort with the maturity of the underlying Bitcoin market.” If only maturity points translated to actual ETF approvals!

What’s at Stake?

The regulatory drama unfolds as Grayscale awaits a decision on its application to convert its Bitcoin Trust (GBTC) into a physically-backed ETF. This decision will be a historic first in the U.S. while ending a lengthy review process that began back in November 2021. The suspense is thicker than a double shot of espresso!

Expert Opinions and Odds Against Approval

Despite the overwhelming public support, industry experts remain skeptical about the SEC’s likelihood of approval. Comparing the chances of GBTC getting the nod to the New York Jets winning the Super Bowl seems like a perfect analogy from Bloomberg ETF analyst Eric Balchunas, who assigned a mere 0.5% probability. It looks like the SEC is not quite in the mood for a Bitcoin ETF fiesta.

What Happens Next?

If the SEC throws cold water on Grayscale’s application, it’s unclear what the company’s next move will be. While they seem steadfast in their commitment to converting GBTC to an ETF, hiring former U.S. Solicitor General as a legal strategist signals they’re not backing down without a fight. Meanwhile, Grayscale’s recent launch of a crypto-linked ETF in Europe shows they are ready to keep the engine running, regardless of what happens on U.S. shores.