The Securities and Exchange Commission has yet to decide how it will react to a recent court ruling that found the SEC made a mistake in denying applications for spot Bitcoin exchange-traded funds (ETFs), according to SEC Chair Gary Gensler on Wednesday.
It is possible that further delays would result from a government shutdown.
Last month, a panel of the United States Court of Appeals for the District of Columbia Circuit concluded that the SEC’s decision to reject Grayscale Investments’ request to convert Grayscale Bitcoin Trust to an ETF was unreasonable.
According to analysts, the ruling opens the door for multiple Bitcoin ETFs to be launched by companies, including BlackRock, Fidelity Investments, and Invesco. However, the regulator may still turn down those applications for reasons the court did not address.
In a hearing on Wednesday before the House Financial Services Committee, Gensler indicated that his agency was still examining the appellate court’s ruling. “It’s still an active consideration of the commission,” he said.
However, any decision could be delayed by the government shutdown, which could begin as early as Sunday.
In general, the fate of ETF applicants is decided in mid-October, at which time the SEC must choose whether to appeal Grayscale’s ruling. According to a representative for the judiciary’s administrative arm, the federal courts might remain open for at least two weeks if the government shuts down, although some court dates may be postponed.
Several pending Bitcoin spot ETF requests from would-be issuers have deadlines in mid-October as well.
According to Gensler, a shutdown would likely result in furloughs for 92% of the agency’s staff, putting all work aside except for the most urgent. In recent days, the SEC has postponed certain Bitcoin ETF filings until 2024, breaking with its usual practice of responding promptly when deadlines are approaching.
Still, it may take weeks for the SEC to approve prospectuses and other materials even if the SEC approves the applications in October.The SEC may eventually have little room to prevent Bitcoin spot ETF from entering the market, but a government shutdown would make a 2023 launch for the assets highly uncertain.