Grayscale Investments won its lawsuit against the US Securities and Exchange Commission in August. The DC Circuit Court of Appeals formalized the decision last week.

And now, the industry waits to see what happens next in the crypto firm’s quest to convert its Grayscale Bitcoin Trust (GBTC) to an ETF.

The court had ruled that the SEC’s decision to block GBTC’s conversion to an ETF — but allow bitcoin futures ETFs to launch — was “arbitrary and capricious.” It vacated the regulator’s disapproval order as part of the decision.

Grayscale filed with the SEC last month to register shares of GBTC under the Securities Act of 1933 via an S-3 form. The SEC would need to sign off on this form, as well as a 19b-4 filing filed by NYSE Arca on behalf of Grayscale, for the conversion to move forward.

Read more: Bitcoin at $31K as court formalizes Grayscale win over SEC

A 19b-4 filing is a form used to notify the SEC of a proposed rule change.

GBTC is ready to operate as an ETF upon those approvals, Grayscale noted in a Oct. 19 blog post — adding it would be “working collaboratively and expeditiously with the SEC”

The trust’s shares were trading at a roughly 13.5% discount to its net asset value Thursday, according to — down from as high as nearly 50% earlier this year.

Read more: Grayscale moves along bitcoin ETF bid with ‘procedural milestone’

But next steps are not exactly clear. A Grayscale spokesperson declined to comment further.

Surprised how quiet it is re: GBTC conversion to ETF…

Grayscale won court case on Aug 29th.

Filed S-3 registration statement on Oct 19th.

Court issued formal mandate on ruling Oct 23rd.

Apparently, still no word from SEC as to whether NYSE/Grayscale needs to refile 19b-4.

— Nate Geraci (@NateGeraci) November 3, 2023

Jay Gould, special counsel at law firm Baker Botts, said the SEC is likely to continue imposing “impediments” to public crypto offerings due to investor protection concerns.

“I would expect that NYSE Arca will refile a 19b-4 on behalf of Grayscale because that is likely the quickest and most efficient path to a resolution,” Gould told Blockworks. “Grayscale may find it necessary to go back into court if the SEC denies the request again.”

But the exchange hasn’t re-filed a 19b-4 yet. And a Sept. 5 letter by Grayscale lawyers to the SEC signals the crypto firm might not feel another such filing is necessary.

NYSE Arca originally filed the trust’s proposed rule change on Oct. 19, 2021. The SEC disapproved the filing on June 29, 2022 — roughly a week before its deadline to rule on the proposal.

The SEC said at the time NYSE Arca had not met its burden … to demonstrate that its proposal meets requirements “to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”

“The Trust’s Rule 19b-4 filing has now been pending for nearly three times the length permitted for commission action under Section 19(b) of the Exchange Act,” the Grayscale lawyers wrote.

“We believe the commission should conclude that there are no grounds for treating the Trust differently from ETPs that invest in bitcoin futures contracts traded on the Chicago Mercantile Exchange … whose Rule 19b-4 filings the commission has previously approved, and therefore move expeditiously to approve the trust’s Rule 19b-4 filing as well,” they add.

Scott Johnsson, a general partner at Van Buren Capital, said in an Oct 26 X post he thinks “we can safely assume” NYSE Arca will not refile a 19b-4 on behalf of Grayscale. He noted previously this could mean the SEC is fine with the firm relying on the one filed in 2021.

“Consistent with so much else we’re seeing,” Johnsson added in the post. “Not the actions you’d expect if SEC was digging in heels/erecting roadblocks [in my opinion].”

An SEC spokesperson has declined to comment beyond public filings on this matter.

Other prospective bitcoin ETF issuers have amended their filings in recent weeks — with Ark Invest CEO Cathie Wood saying her firm’s updates followed dialogue with the regulator.

Arie Heijkoop, partner at law firm Haynes Boone, previously told Blockworks that the SEC denying the GBTC application on new grounds “may be viewed skeptically.” The regulator has not raised other significant concerns, such as custody issues, in spot bitcoin ETF denials or in its responses to Grayscale’s legal filings, he added.

“I expect the SEC to grant approval to spot bitcoin applications, which may include Grayscale, possibly as early as the end of this year but more likely in early- to mid-2024,” Heijkoop said.

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