The fate of Bitcoin’s price throughout the rest of the year largely lies in the answer to one question: Will a Bitcoin spot ETF be approved in the United States? Joe Carlasare – a commercial litigator supporting Bitcoin – tweeted on Monday that he gives such a product a 30-40% chance of launching inside of a year. He later spoke with CryptoPotato to explain how he arrived at those numbers. The Trouble With Grayscale’s Lawsuit According to Carlasare, the market’s best bet at launching a spot ETF remains with Grayscale’s lawsuit against the U.S. Securities and Exchange Commission (SEC). As the owners of the world’s largest Bitcoin fund, Grayscale sued the regulator last year for denying its ETF application in an “arbitrary and capricious” manner, despite approving multiple
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The fate of Bitcoin’s price throughout the rest of the year largely lies in the answer to one question: Will a Bitcoin spot ETF be approved in the United States?
Joe Carlasare – a commercial litigator supporting Bitcoin – tweeted on Monday that he gives such a product a 30-40% chance of launching inside of a year. He later spoke with CryptoPotato to explain how he arrived at those numbers.
The Trouble With Grayscale’s Lawsuit
According to Carlasare, the market’s best bet at launching a spot ETF remains with Grayscale’s lawsuit against the U.S. Securities and Exchange Commission (SEC).
As the owners of the world’s largest Bitcoin fund, Grayscale sued the regulator last year for denying its ETF application in an “arbitrary and capricious” manner, despite approving multiple similar products in the form of Bitcoin futures ETFs.
The case went to its first oral hearing in March, during which judges seemed more sympathetic to Grayscale’s arguments than the SEC’s. This spurred certain analysts including Bloomberg’s Elliot Z. Stein to assign 70% odds to Grayscale’s victory, thus boosting the odds of a spot ETF approval by the end of the year.
Carlasare, however, refuses to be so optimistic – especially as a Grayscale victory won’t necessarily lead to a spot ETF.
For what seems like the 100th time, my personal view is that the probability of success in approving a spot bitcoin ETF in the near term (inside of a year) is still 30-40% —- which I consider to be fairly good odds.
I strongly reject the view that approval is highly probable… https://t.co/fAuNJ9pkhh
— Joe Carlasare (@JoeCarlasare) July 3, 2023
“The hard part about handicapping the Grayscale v SEC suit is that a “win” may just mean the court of appeals directs the SEC to revisit their decision,” explained the lawyer to CryptoPotato via DM. “In other words, the Court could just send the case back for further proceeding and assessment in front of the SEC .”
BlackRock’s SSA With Coinbase
A review by the SEC has inevitably meant rejection for every applicant with a similar product thus far. Nevertheless, the market is optimistic that a filing last month from BlackRock – the world’s largest asset manager – can get through, given the firm’s phenomenal success rate against the SEC with past applications.
The SEC called BlackRock and Fidelity’s filings “inadequate” last Friday for failing to share a specific spot Bitcoin exchange with which their respective exchanges, NASDAQ and CBOE, would form a surveillance sharing agreement (SSA). Both firms have already refiled, clarifying that their planned SSA will be with Coinbase
While Coinbase is the largest Bitcoin exchange in the United States, Carlasare fears the platform doesn’t represent a market of “sufficient size,” as the SEC requests.
“Sufficient size is somewhat ambiguous, but they have said it has to be a market large enough so that a person or firm attempting to manipulate the Bitcoin spot market would need to necessarily trade on that platform,” he explained. “If you apply that to the SSA with Coinbase, one can conclude that’s not going to satisfy [the] SEC, especially where the majority of spot trading volume is outside the U.S.”
Overall, Carlasare gives Grayscale 50% odds of victory against the SEC in its lawsuit, and Coinbase 40% odds of being the “secret sauce” needed to get BlackRock’s ETF approved. He considers both sets of odds “optimistic.”