After facing defeat against Grayscale in court, the Securities and Exchange Commission (SEC) is now faced with a difficult decision regarding the influx of Bitcoin spot ETF applications it has received. One possible option for the agency is to rescind prior approval of the nation’s Bitcoin futures ETFs, effectively eliminating all Bitcoin ETF options for U.S. buyers. Although this outcome is unlikely, Bitcoin-supportive lawyer Joe Carlasare believes that a full reversal on futures ETFs is within the realm of possibility, assigning a 20% likelihood to this outcome.
Carlasare referred to an audio excerpt from the SEC’s oral arguments in March, in which an SEC lawyer stated that they may have to reconsider the Bitcoin futures ETFs if the court ruled in Grayscale’s favor. Tuesday’s ruling deemed the SEC as being arbitrary and capricious in its denial of Grayscale’s Bitcoin spot ETF application, criticizing the agency’s justifications for treating futures ETFs as less prone to manipulation than spot ETFs as unreasonable. If the SEC were to rescind its previous futures ETF approvals, it could claim legal consistency while continuing to deny a spot ETF.
The motives of the SEC are under scrutiny from various parties, with some suspecting a focused agenda to stifle the crypto industry in the United States. It is believed that SEC Chairman Gary Gensler may be willing to take such actions, as he is more concerned about politics than the market reaction. The industry has been waiting for clear regulatory progress, and the SEC’s decisions in the Grayscale case could have wider implications. The SEC still has other options, such as appealing the court’s ruling, rejecting Grayscale’s ETF application on different grounds, or finally allowing a spot ETF to be approved.
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