SEC revisits Grayscale ruling, Bitcoin ETF faces new scrutiny

The U.S. Securities and Exchange Commission (SEC) is re-evaluating its previous decisions regarding Bitcoin exchange-traded funds (ETFs), including a key ruling regarding digital asset manager Grayscale.
The reexamination comes in response to a federal appeals court order directing the SEC to review a previous denial of Grayscale's application to convert its Bitcoin Trust into an ETF. This development could signal a potential change in the regulatory environment for cryptocurrency-based financial products.
Gensler's cautious stance
During a recent Senate Banking Committee hearing, the SEC chairman was asked about the standards needed to approve a spot Bitcoin ETF. The chairman’s response indicates that the SEC is still reviewing multiple aspects of Bitcoin and related financial products, including the Grayscale ruling.
Specific details have not been disclosed, but the tone suggests continued caution in assessing the markets and infrastructure surrounding Bitcoin.
Focus on Grayscale Judgment
Last week, a federal appeals court issued an order asking the SEC to reconsider its original decision to refuse to convert Grayscale’s Bitcoin Trust into an ETF. The court ruling noted that Grayscale’s proposed product was not materially different from existing Bitcoin futures exchange-traded products on the U.S. market. In response to the ruling, Grayscale sent a letter to the SEC claiming there was no legitimate reason to treat its product differently from futures-based Bitcoin ETPs. It is important to note, however, that the court order only requires a review of the application, not automatic approval. The decision to re-evaluate Grayscale’s applications could have wide-ranging implications for the cryptocurrency industry. On the positive side, approval could open the floodgates to traditional investments in Bitcoin, bolstering the digital currency’s legitimacy and market position. Rather, the SEC's continued reservations reflect greater uncertainty about market volatility and investor safety.
(Reposted from U Today)