SEC Gearing Up For More Bitcoin ETF Rejections Despite Court Ruling: Berenberg Analysis

Despite a significant court setback, the SEC may prepare additional justifications for rejecting spot bitcoin ETF applications. Even after a court ruled against them in the Grayscale case, analysts at Berenberg suggest the battle for a spot bitcoin ETF is far from over. The scathing court rebuke forced the SEC to reconsider its stance, but it doesn't guarantee approval.

What Did The Court Rule?

A federal appeals court ruled that the SEC was wrong to reject Grayscale’s application to convert its flagship Grayscale Bitcoin Trust (GBTC) into an ETF. The D.C. Circuit Court of Appeals closed the books on a dispute between the U.S. Securities and Exchange Commission (SEC) and Grayscale, with a final ruling in Grayscale's favor. Grayscale sued the SEC last year when the securities regulator denied its application to turn its bitcoin fund, known as GBTC, into an ETF. The ETF would be backed by actual Bitcoin.

SEC's Options Following Grayscale's Victory

The U.S. Securities and Exchange Commission (SEC) will not appeal a recent court ruling that found it was wrong to reject an application from Grayscale Investments. Crypto asset manager Grayscale Investments has scored a major victory against the United States Securities and Exchange Commission in its efforts to convert its over-the-counter GBTC fund into a spot bitcoin ETF. However, this doesn’t necessarily pave the way for automatic approval. The SEC could explore alternative reasons for rejection, potentially delaying the launch of a spot bitcoin ETF, possibly even beyond 2025, even though The D.C. Court of Appeals ruled the SEC acted “arbitrarily and capriciously” in denying Grayscale’s spot bitcoin ETF application.

Berenberg's analysis highlights that while Grayscale won this round, the SEC's stance on Bitcoin ETFs remains cautious, suggesting further hurdles for future applicants.