Grayscale has 70% chance of winning SEC lawsuit: Bloomberg analyst

The company behind the world’s largest bitcoin fund has a 70% chance of overcoming the US Securities and Exchange Commission (SEC) in a major crypto industry lawsuit, according to Bloomberg Intelligence senior legal analyst Elliot Z. Stein.

Given the circumstances, the company’s analysts believe there is a 50% chance of a bitcoin spot ETF being approved in the United States this year.

Grayscale, Blackrock and the SEC

According to Stein, Grayscale’s optimistic approach to the lawsuit may actually serve to benefit BlackRock — which filed for a spot ETF product last week — rather than Grayscale’s own filing.

“The SEC and Chairman Gary Gensler may be making up for the loss and are trying to preemptively soften or make it meaningless by approving the spot bitcoin ETF application before or around the court’s decision.” wrote Analysts in Tuesday’s note.

Grayscale’s lawsuit alleges the SEC violated the Administrative Procedure Act and the Securities Exchange Act by arbitrarily rejecting its bitcoin spot ETF application last year, despite choosing to approve several similar futures ETF products.

The SEC has rejected every spot ETF application to date, citing their potential issuers’ failures to provide adequate protections and oversight against market manipulation.

During the first round of oral arguments in March, all three justices overseeing the case expressed skepticism about the SEC’s case, saying the agency “has provided no explanation that the petitioners are in the wrong.” For Stein, this skepticism increased Grayscale’s chances of victory from 40% to 70%.

BlackRock’s Approval Prospects

Bitcoin surged above $31,000 this week on hopes that a bitcoin spot ETF will be approved following BlackRock’s filing. The $10 trillion asset manager’s prior submission has a historical approval rate of 575:1.

SEC too allowed A leveraged bitcoin futures ETF last week. Bloomberg ETF analyst James Seifert interpreted this as a sign that the SEC may be “lightening” its approach to bitcoin offerings. do on Friday.

That said, there is one aspect of BlackRock’s ETF filing that Seifert thinks could undermine its application: its partnership with Coinbase for custody — an exchange against which the SEC filed a major lawsuit. Is.

“You have to take it as a risk,” he said during an event Interview Fridays on the Unchained Podcast. “We don’t think this thing is 70% likely to be approved, as we think about the Grayscale lawsuit. There are still possibilities against Blackrock.”