Grayscale’s Huge Court Win Over SEC: Is This the Turning Point for the Approval of Bitcoin ETFs?
In a landmark ruling, the U.S. District Court for the District of Columbia found that the Securities and Exchange Commission (SEC) did wrong when it denied Grayscale Investments’ request to list an exchange-traded fund that tracks the price of bitcoin.
The cryptocurrency and asset management sectors, which have been attempting for years to persuade the SEC to approve a spot bitcoin ETF, have been closely following the case. The largest cryptocurrency in the world, Bitcoin, would allegedly be accessible to investors without requiring them to hold it. However, the SEC is concerned that spot bitcoin ETFs could be manipulated.
What Went Down With Grayscale?
Grayscale’s request to convert its spot Grayscale Bitcoin Trust into an ETF was rejected by the SEC last year. However, the commission has allowed bitcoin futures ETFs, which monitor contracts to buy or sell bitcoin at a predetermined price, but rejecting spot bitcoin ETFs.
The SEC deemed Grayscale’s proposal to use the same anti-manipulation measures that were approved for those futures ETFs to fall short of its standards. Grayscale was only one of many asset managers whose spot bitcoin ETF applications the SEC rejected on the basis of investor protection, along with Cathie Wood’s ARK, Fidelity, and Invesco.
Grayscale sued the SEC in contrast to the other companies. The case was immediately sent to the appeals court because the defendant is a regulator.
The CEO of Grayscale, Michael Sonnenshein, stated on X (formerly Twitter) that the company’s legal staff is “actively reviewing” the court decision.
What Happens Next?
The decision may be appealed by either party within 45 days, at which point the matter may either be heard by the US Supreme Court or an en banc panel. The SEC may or may not file an appeal. On Tuesday, requests for response from the regulator were not immediately fulfilled.
In the event Grayscale wins and the SEC decides not to file an appeal, the court will clarify how its ruling should be carried out. This would entail giving the SEC specific instructions to approve the application or to reconsider Grayscale’s application, in which case the SEC might still reject the idea for other reasons.
Could Grayscale’s Bitcoin ETF Change the Industry?
In addition to pushing the price of Bitcoin from 26000 to 27500 in less than 30 minutes, the news of the US federal court’s decision in favor of Greyscale’s Bitcoin ETF (GBTC) may also be the silent start of the long-awaited bull run before the second Bitcoin halving in 2024.
It’s true that this court decision will allow the first Bitcoin ETF to be approved, even though it was the first to apply. BlackRock’s Bitcoin ETFs and other investment products will therefore probably be approved very soon.
