The DC Circuit Court of Appeals has handed Grayscale Investments a victory in its battle against the Securities and Exchange Commission (SEC). The SEC must now review Grayscale’s application for a Bitcoin exchange-traded fund (ETF). The creation of a spot BTC ETF has been a long-standing goal for the cryptocurrency industry, but the SEC has previously rejected every application.
Grayscale sued the SEC in June 2022 after the regulator blocked the conversion of its Bitcoin Trust (GBTC) to an ETF. The lawsuit focused on the fact that the SEC had approved ETFs that invested in Bitcoin futures contracts but denied investors the ability to invest in products that hold Bitcoin directly. Grayscale argued that the rejection of its ETF application was arbitrary and capricious.
The Court’s Decision
The court agreed with Grayscale and ordered that the SEC’s order be vacated, stating that the denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products.
Grayscale CEO Michael Sonnenshein announced that the company is reviewing the court’s opinion and preparing to move forward. The SEC now has 45 days to appeal the ruling. If an appeal is made, the case would eventually be heard by all judges on the court or an en banc panel. While the ruling means that the SEC must review Grayscale’s application, there is no guarantee of approval for the conversion of GBTC into an ETF. However, industry experts believe that spot BTC ETFs are coming to the US, which could have a positive impact on the price of Bitcoin.
Following the news of the ruling, Bitcoin’s price saw a sharp increase, reaching a daily high of $27,765 before pulling back to $27,350, representing a 4.6% gain on the 24-hour chart.