In a week filled with ups and downs, the cryptocurrency market experienced yet another wild ride. Following the Securities and Exchanges Commission’s (SEC’s) decision not to appeal the Grayscale ruling, Cointelegraph released a post on X this week claiming a spot Bitcoin ETF had been approved.

With all the pent-up expectations in the market, this news skyrocketed Bitcoin to $30,000. Unfortunately, it was fake news, once again exposing the lack of journalistic rigor in many crypto media outlets and causing the entire market to dump.

This episode cast a shadow on the industry and led to over $100 million in liquidations. However, despite the turbulence and widespread frustration, it appears that the SEC is laying the groundwork for potential approval of spot Bitcoin ETFs in the months ahead.

In a Bloomberg interview this week, SEC Chair Gary Gensler shed light on the agency’s decision not to appeal the Grayscale ruling and the implications for investors. He was asked outright whether the litigation would continue or was now resolved, which would indicate that the SEC was poised to approve Bitcoin spot ETFs.

In response, he said, “We didn’t appeal last Friday. I think that’s accurate. But what we have in front of us, just so the viewing public understands, we have not one, but multiple, I think it’s 8 or 10 filings that the staff, and ultimately the commission is considering for what’s called exchange-traded products.”

Gensler went on to explain these products as securities that hold Bitcoin and are traded on markets. For those unfamiliar with Grayscale, it’s an investment fund with approval to hold Bitcoin and trade it within a security known as the Grayscale Bitcoin Trust.

Grayscale had taken legal action against the SEC after being denied permission to convert their trust into an exchange-traded product (ETP). The crucial distinction between a trust and an ETP is that the trust cannot be traded on exchanges registered with the SEC and can only be sold over the counter (OTC) to accredited investors.

In general, an accredited investor is someone who meets specific requirements in terms of income, net worth, or qualifications. These criteria essentially rule out many members of the public, which reduces the potential trading volume of the trust.

The Grayscale Bitcoin Trust’s inability to trade on registered exchanges presents an additional challenge — it cannot freely buy or sell the Bitcoin it holds. As an ETP, it would have the flexibility to trade the underlying asset more effectively to balance Bitcoin volume with shares sold.

What piques interest in Gensler’s Bloomberg interview is his demeanor. Previously, he had been openly critical of crypto and dismissive of the companies involved. In this interview, he appeared more receptive and open when discussing the potential approval of spot Bitcoin ETFs.

When asked about the rumors that one business would receive preferential treatment and get approval ahead of any others, he refused to deny this. Instead, he explained that the approval process also depends on the credentials of the companies seeking to create an ETP.

He said, “I’m not going to prejudge. The staff’s doing work on those multiple filings, but it’s also about those companies that are issuers. See, when a company or an asset manager is seeking to take something public, these exchange-traded products need to register with the SEC, and they go through a filing somewhat similar to going public, like an IPO. So it’s really the work of our Division of Corporation Finance that gives feedback, and our Division of Trading and Markets looks at the filings.”

In summary, it appears that the SEC’s decision not to appeal the Grayscale ruling may signal their intent to approve one or more spot Bitcoin ETFs. However, not all pending applications are guaranteed simultaneous approval. Regardless, 2024 is shaping up to be a promising year for crypto, potentially ignited by the approval of several ETFs.