Appeals Court Ruling on Bitcoin Spot 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 US Securities and Exchange Commission (SEC).
Key Takeaways
- The court ruled the SEC did not sufficiently explain its reasoning for blocking Grayscale’s conversion of its Grayscale Bitcoin Trust (GBTC) into an ETF listed on NYSE Arca.
- The court highlighted that the SEC did not adequately address Grayscale’s argument about the correlation between spot and futures markets for bitcoin.
- The SEC is now required to reevaluate Grayscale’s spot bitcoin ETF application with clearer reasoning if it chooses to reject it again.
Background: Grayscale’s Bitcoin ETF Case
Grayscale filed a lawsuit against the SEC after being denied approval to launch a spot bitcoin ETF. While futures-based bitcoin ETFs have been approved, a spot bitcoin ETF is yet to materialize in the US.
Grayscale argued that a spot bitcoin ETF would not pose greater risks compared to futures-based products, emphasizing the high correlation between spot and futures markets for bitcoin.
Implications of a Spot Bitcoin ETF
The SEC has historically expressed concerns about fraud and manipulation risks related to a bitcoin spot ETF. While the recent court ruling is a step forward, it does not guarantee immediate approval.
A spot bitcoin ETF could potentially attract institutional investors, enhance regulatory approval for bitcoin, and increase mainstream acceptance among financial institutions and investors.
Following the court’s decision on the Grayscale case, the bitcoin price surged by over 6%.
