- Bloomberg Intelligence believes there is a 70% chance of Grayscale winning its Bitcoin ETF case against the SEC
- A victory would see Grayscale become the first entity to be awarded a spot Bitcoin ETF
- Grayscale sued the SEC in June last year after its conversion was rejected
Bloomberg Intelligence has put the odds of Grayscale succeeding in its bid to overturn the Securities and Exchange Commission’s (SEC) denial of its Bitcoin ETF bid at 70% following oral arguments in court yesterday. This marks a stunning turnaround from its pre-hearing odds of 60% in favor of the SEC, with senior litigation analyst Elliott Stein now claiming that the court will probably rule for Grayscale, but that the wording of any ruling will be crucial with regards to whether it can actually go ahead..
Hot off the presses from @NYCStein (with miniscule input from yours truly). Upping Grayscale victory odds to 70%. *But* language of the ruling will be key either way.
If you want to read the entire note it can be found here for Bloomberg Terminal clients:https://t.co/dMLwrBu9d1 pic.twitter.com/mmw3NgfnSR
— James Seyffart (@JSeyff) March 7, 2023
Bloomberg Intelligence Liked What it Heard
Grayscale sued the SEC in June last year after the agency rejected its proposed conversion from the Grayscale Bitcoin Trust into a Grayscale Bitcoin ETF, accusing it of being “arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.” Oral arguments in the case were heard yesterday, and clearly something in what Stein and his team heard gave them supreme confidence that the SEC’s argument is less than sound, suggesting that when the ruling comes later this year from the three-judge panel that it will rule in Grayscale’s favor.
Such an outcome would be a major fillip for GBTC investors, who have had their funds trapped on the platform ever since the first investments in 2013, funds which now total $5.5 billion in value. A Bitcoin ETF has always been the only hope these investors had of getting their money out of Grayscale, with the value of their GBTC shares plummeting in recent years, to the point where some investors have plotted a revolt and an attempt to force the fund to close.
Stein Offers Word of Caution
Amid the excitement of a Bitcoin ETF being awarded however, Stein did offer a word of caution:
Language in the court ruling will be key, however, as to whether the court gives the SEC an opening to reject the application on different grounds or locks them into accepting it. We lean toward the former for now.
Given the opportunity the SEC would almost certainly appeal a ruling in Grayscale’s favor, which immediately throws the question of whether Grayscale would actually be able to go ahead with the conversion up into the air.
Regardless of this, any positive ruling will have an immediate impact on the Bitcoin price, given that a Bitcoin ETF has been almost ten years in the waiting.
