Grayscale Investments, a leading crypto investment firm, recently landed a huge victory in its legal tussle with the Securities and Exchange Commission (SEC) over its proposed Grayscale ETF. A federal appeals court ruled in favor of Grayscale and compelled the SEC to reevaluate its earlier denial of Grayscale’s proposal to convert its Bitcoin Trust, called GBTC, into an ETF. This judgement has sent ripples across the crypto industry, leading to an immediate surge in Bitcoin prices and offering hope for the approval of spot bitcoin ETFs in the U.S.
The legal conflict was initiated when the SEC blocked Grayscale’s attempt to convert its Bitcoin Trust into a Grayscale ETF. Grayscale retaliated by suing the SEC in June 2022, arguing that the SEC had acted arbitrarily in approving ETFs investing in bitcoin futures contracts while rejecting products that aimed to hold bitcoin directly. The three-judge panel of the DC Circuit Court of Appeals sided with Grayscale, ruling that the SEC must review its rejection of Grayscale’s proposal.
The court’s decision signals a monumental step forward for American investors and the wider bitcoin ecosystem. The ruling also raises the prospects of other asset managers winning approval for their products. Following the court’s decision, bitcoin prices rose by more than 5%, exceeding $27,000. This price surge underlines the market’s anticipation and the significant impact such a decision holds.
However, despite this victory for Grayscale, the crypto market isn’t tossing confetti just yet. While some tout this victory as the “next big thing” for the digital currency landscape, the market’s lukewarm response and a mere 7% uptick in Bitcoin’s price post-ruling paint a different story.
The SEC has long been skeptical about approving spot bitcoin ETFs, citing concerns over market manipulation. However, the court’s decision could compel the SEC to reassess its stance, potentially opening the doors for a spot bitcoin ETF in the U.S.
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