SEC Could Prepare Fresh Reasons to Deny Bitcoin ETFs; Bloomberg Analyst Elliott Z. Stein

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The U.S. Securities and Exchange Commission (SEC) is exploring fresh strategies to bolster its continued rejection of spot Bitcoin exchange-traded fund (ETF) applications, as revealed by Elliott Z. Stein, a seasoned litigation analyst from Bloomberg Intelligence.

SEC’s Evolving Strategy for Bitcoin ETFs

Traditionally, the SEC has cited concerns about the susceptibility of an unregulated crypto market to manipulation as the foundation for its rejections. However, the recent victory by Grayscale may have increased the chances of the “SEC finally approving one or more spot Bitcoin ETF applications.” It’s important to note that the federal judge did not compel the SEC to approve a spot Bitcoin ETF but rather urged the regulator to reevaluate its reasons for rejecting Grayscale.

Considering these developments, Stein raises a cautionary flag, expressing apprehension that the SEC’s pivot toward new grounds for denial, such as custody-related issues, could inadvertently invite additional legal challenges.

Gensler’s Needs to Make Critical Decisions Amidst Bitcoin ETF Legal Battles

Gary Gensler, at the helm of the SEC, now faces critical decisions amidst the legal battles surrounding Bitcoin ETFs. Following a recent court ruling challenging its past denials, the SEC stands at a crossroads with far-reaching implications for cryptocurrency investments.

One option for the SEC is to contest the court’s decision, but certain aspects of the court’s ruling make this choice less appealing. Meanwhile, the SEC retains the authority to approve one or more of the nine pending spot Bitcoin ETF applications, some of which are submitted by major industry players like Ark, Bitwise, and BlackRock. The regulator is working under a stringent deadline, with a maximum of 240 days to render a decision. The clock is ticking, and the first deadline is set for January 10, 2024.

Another potential approach is for the SEC to devise fresh reasons to reject Bitcoin ETFs, but this could potentially lead to more legal disputes.

In this pivotal moment, Gary Gensler faces a challenging decision-making process. He must consider the evolving cryptocurrency landscape and decide whether to adapt to the changing tide or adhere to traditional approaches, potentially risking further legal confrontations.

Undoubtedly, Gensler’s decision will have repercussions not only for the cryptocurrency market but also for the broader financial realm.