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SEC's Two Paths: Approve Bitcoin Spot ETF or Delist Futures ETF as Well?

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SEC

The cryptocurrency community is generally excited about the SEC's loss in the Grayscale lawsuit, but analysts have also outlined the potential worst-case scenario.

Optimistic View

Adam Cochran: Low Chance of SEC Appeal

Adam Cochran, founder of venture capital firm Cinneamhain Ventures, believes that the court's ruling requiring the SEC to reexamine Grayscale's transformation is essentially a massacre of the SEC's position.

He pointed out that the SEC may:

  1. Come up with new reasons and delay the approval of Grayscale's spot ETF

  2. Approve Grayscale's spot ETF

  3. Request an appeal for the entire case

However, Adam Cochran noted that the judge has repeatedly mentioned that the SEC did not present substantive arguments, so an SEC appeal is likely to result in a worse outcome. Therefore, he sees this as a significant victory.

Blockchain Association General Counsel: SEC Will Approve Bitcoin Spot ETF for Face-saving

Jake Chervinsky pointed out that the federal court found the regulatory agency's inconsistency to be a violation of administrative procedure, which is very rare, and the court's decision puts the SEC in a very awkward position.

He believes that the SEC is unlikely to engage in costly litigation again and may even play dead to avoid approving the spot ETF, but may still approve it in a way to save face, as if to say, "See? We at the SEC have not always been against cryptocurrencies."

Pessimistic View

Bloomberg ETF Analyst Reveals Worst-case Scenario: SEC Delists Bitcoin Futures ETF

James Seyffart believes that while approving the spot ETF is an option for the SEC, they might also delist the Bitcoin futures ETF as a last resort.

He also emphasized that for the past few months, he has been suggesting that the reason the Bitcoin spot ETF has been blocked may be related to custody and settlement issues. These infrastructure-related businesses are not a concern for Bitcoin futures settled against an index.

Therefore, if the SEC continues to refuse approval based on concerns about custody and settlement, he would not be too surprised.

However, Eric Balchunas, also a Bloomberg ETF analyst, believes that the SEC is unlikely to delist the Bitcoin futures ETF and states that the SEC's only choice is to approve the spot ETF.