Is today the day? There is good reason to think it is, and that a federal appeals court will publish its long-awaited ruling in Grayscale v. SEC, a case that will determine whether the Securities and Exchange Commission was unreasonable in refusing to grant a Bitcoin ETF. There is a lot at stake for the crypto industry: If Grayscale prevails, the doors swing open to trillions of dollars of newly eligible capital, and if it doesn’t, prices will fall in response to yet another setback.
While crypto watchers have been waiting for the decision for months, there is strong reason to think the ruling will finally come today or at the end of the week—Tuesday and Friday being the days the District of Columbia Court of Appeals, which heard the case, publishes its decisions. While it’s not a certainty, this is most likely the week for two reasons. First, as lawyer Scott Johnson points out, we are at the 160-day mark for the case—and the court has issued rulings within 160 days of hearing the case 94% of the time. Second, this is precisely the time of year when the judge’s law clerks, who help craft rulings over the course of a one-year term, move on to make way for new clerks.
As for the case itself, it looms large because analysts believe the approval of a Bitcoin ETF in the U.S. will provide a legal and symbolic green light for pension funds and other deep-pocketed investors to come off the sidelines and add at least a modest amount of Bitcoin to their portfolios. If that happens, look for the price of Bitcoin to zoom well past the $30,000 mark and to spark a broader rally across the sector.
For that to occur, of course, Grayscale will first have to win the case, and if it doesn’t win, you can expect a selloff across crypto markets. The odds are in the company’s favor, however, following a March hearing in which the court’s three judges boxed the SEC lawyer into a corner on the question of how the agency could approve a Bitcoin futures ETF—a risky and more exotic product—and not a spot market ETF. The hearing led Bloomberg Intelligence to raise its predicted outcome that Grayscale would win the case from 40% to 70%.
While the court’s decision is likely to produce an immediate swing in crypto prices, the timeline for a Bitcoin ETF would remain uncertain. If Grayscale prevails, the SEC—whose chairman has been waging an intense political campaign against crypto—will find a way to slow roll the paperwork for would-be ETF issuers. Meanwhile, if the agency wins, a Grayscale appeal would take months and months to get a decision at the same time as the crypto industry is facing headwinds pushing its agenda in Washington, D.C. The upshot is, as of Tuesday morning, we still don’t know what will happen—other than that this week is likely to be one of the most consequential for crypto in months.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
