Victory for Crypto Industry Sets Stage for Bitcoin ETF

A recent court victory in the crypto industry has brought the long-awaited Bitcoin exchange-traded fund (ETF) one step closer to reality. However, the Securities and Exchange Commission (SEC) may pose a significant hurdle, potentially leading to a delay of up to two years or more, according to analysts from Compass Point Research & Trading.

The SEC Chair, Gary Gensler, has been a staunch opponent of crypto-related actions, making it unlikely that he will simply approve applications for spot BTC ETFs without resistance. The analysts assert that the court's decision significantly limits the SEC's chances of prevailing in the long run.

As of now, the SEC has not provided any comments on the matter. Following the court ruling, the agency announced that it is currently reviewing the decision to determine its next course of action.

In August, a panel of judges stated that the SEC acted incorrectly when rejecting Grayscale Investments' bid to convert the Grayscale Bitcoin Trust (GBTC) into an ETF. The SEC's argument of inadequate surveillance on trading platforms for detecting fraud and manipulation was deemed arbitrary by the court. Interestingly, the SEC had previously approved ETFs that were tied to Bitcoin futures in the same underlying market.

Nevertheless, analysts point out that the SEC still has options to resist. For instance, they have until October 13 to request an "en banc" hearing, which would allow them to challenge the court's ruling in front of all the judges in the U.S. Court of Appeals for the D.C. Circuit.

SEC's Potential Actions Could Delay Bitcoin ETF for Over Two Years

According to analysts, these various strategic actions available to the SEC could potentially delay the launch of a Bitcoin ETF for more than two years. However, it remains uncertain whether the agency will choose to pursue this route, as it may find it politically challenging to continue fighting against the growing demand for cryptocurrency investment products.

The SEC has an upcoming deadline on January 10th to decide whether to allow the listing of a Bitcoin ETF issued by ARK Investment Management and 21Shares. Decisions on applications from other issuers, including BlackRock, are expected in the following months. To avoid any appearance of favoritism towards one company over another, the SEC may choose to approve all the applications simultaneously.

The SEC's decision regarding whether to request an en banc hearing by October 13th will provide valuable insights into the potential timeline for the approval of the first Bitcoin ETF. In anticipation of this decision, Bitcoin has been trading in a narrow range around $25,500 as traders closely monitor the SEC's next move.