In the latest episode of Unchained, Bloomberg analyst James Seyffart suggested that the lawsuit between Grayscale and the U.S. Securities and Exchange Commission (SEC) over the agency’s denial of Grayscale’s Bitcoin spot ETF could become irrelevant – if one of the recent Bitcoin spot ETF applications is approved. 

The SEC has repeatedly blocked Grayscale’s attempt to convert its Bitcoin Trust (GBTC) into a spot Bitcoin Exchange Traded Fund (ETF).

However, the situation could change with the recent ETF applications from TradFi giants such as BlackRock, Invesco, WisdomTree, and Valkyrie.

“If one of these is approved, then Grayscale would theoretically be able to convert GBTC into an ETF,” rendering its lawsuit against the SEC moot, Seyffart explained.

Seyffart says the SEC’s denial of Grayscale’s application was not specific to Grayscale but it was because no Bitcoin spot ETFs exist yet. In the past, the regulatory body expressed concerns about the underlying spot market for Bitcoin, questioning whether it is adequately regulated or has surveillance-sharing agreements in place.

Seyffart posits that the SEC could approve a Bitcoin ETF before a decision is made in Grayscale’s lawsuit. This move could potentially prevent the SEC from losing the case in federal court. Seyffart explained the potential strategy of the SEC. If Gary Gensler’s agency manages to approve a Bitcoin ETF, such as the one proposed by BlackRock, it could then present this to the courts as evidence of a legitimate path to approval. This could potentially pave the way for Grayscale to convert its Bitcoin Trust into an ETF, essentially because BlackRock managed to navigate the process successfully.

Read more: The Bitcoin ETF Is a Double-Edged Sword

Despite the ongoing legal battle and the uncertainty surrounding approving a Bitcoin spot ETF, Seyffart remains optimistic about Grayscale’s chances. He said: “I think ultimately when one of these gets approved, GBTC will convert to an ETF.”