Appeals Court Ruling on Grayscale Bitcoin ETF
The first bitcoin spot ETF is potentially closer to hitting the market after an appeals court ruled in favor of Grayscale in a case with the U.S. Securities and Exchange Commission (SEC) on Tuesday. The Court of Appeals for the Washington, D.C. circuit stated that the SEC did not provide sufficient reasoning for blocking Grayscale Investments’ conversion of its Grayscale Bitcoin Trust (GBTC) into an ETF to be listed on NYSE Arca.
Key Takeaways
- The court ruled that the SEC lacked proper reasoning for rejecting Grayscale’s attempt to convert GBTC into a bitcoin spot ETF.
- The court highlighted Grayscale’s argument that the spot and futures markets for bitcoin are highly correlated.
- The SEC will need to reevaluate Grayscale’s spot bitcoin ETF application with clearer reasoning if it is rejected again.
Grayscale’s Bitcoin ETF Case Against the SEC
Grayscale filed a lawsuit against the SEC after the agency denied its application for a spot bitcoin ETF. While futures-based bitcoin ETFs have been approved, a spot bitcoin ETF is yet to exist in the U.S. Grayscale contended that a spot bitcoin ETF would not pose additional risks compared to futures-backed products.
Implications of a Spot Bitcoin ETF
The SEC has expressed concerns about fraud and manipulation in the market, opposing the launch of a bitcoin spot ETF. Approval of Grayscale’s application would have significant implications for the market, potentially influencing the bitcoin price and increasing acceptance among mainstream financial institutions and investors.
In response to the court’s ruling, the bitcoin price surged over 6%.