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SEC Not Appealing Grayscale Ruling, Paving Way for US Spot Bitcoin ETF

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October 17, 2023

The SEC will not appeal a court decision that reversed its rejection of Grayscale's application to convert the Grayscale Bitcoin Trust (GBTC) into an ETF, potentially paving the way for the first U.S. bitcoin ETF.

In August, the D.C. Circuit Court of Appeals ruled the SEC's denial of Grayscale's application as "arbitrary and capricious," asserting the need for consistent treatment of similar cases. The SEC has chosen not to challenge this ruling but does retain the authority to deny the application on other grounds. However, many believe the SEC's lack of appeal, in this case, makes it more likely a U.S. spot bitcoin will be approved at some point, with Bloomberg Intelligence now estimating there is a 90% chance that a US spot bitcoin ETF will launch by January 10th.

Besides Grayscale, multiple bitcoin ETF applications are waiting to be approved by the SEC, including from BlackRock, WisdomTree, Ark Invest, Fidelity, and Bitwise.

Bitcoin ETF Could Open Floodgates

A U.S. ETF could open the floodgates of institutional investment into bitcoin, legitimize an allocation to bitcoin in traditional portfolios, and lower the barriers to entry for investors in one fell swoop. Former BlackRock managing director Steven Schoenfield believes a spot ETF approval may result in a "$150 to $200 billion inflow" over three years, which would "double or triple the amount of AUM in current bitcoin products." With a spot bitcoin ETF and further regulatory clarity on the horizon, the catalysts for the next bull run are taking shape, as pent-up bitcoin demand can now more easily flow into bitcoin.

About Eaglebrook Advisors

Eaglebrook is a tech-driven investment manager specializing in bitcoin and digital assets. The firm offers various Bitcoin and Digital Asset SMAs serving financial advisors, registered investment advisors (RIAs), family offices, and institutions. Eaglebrook is backed by wealth management executives and institutions.

For more information, please contact us at +1 (202) 798-1880 or send an email to contact@eaglebrookadvisors.com.

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