A US federal appeals court has ruled in favor of an asset manager in a lawsuit against the Securities and Exchange Commission (SEC) regarding the denial of an application to convert the Grayscale Bitcoin Trust into an exchange-traded fund (ETF).
This development has led to a significant rise in crypto prices, with Bitcoin surging more than six percent and surpassing the $28,000 mark. Grayscale, along with other asset managers such as BlackRock, WisdomTree, and Fidelity, has been advocating for the SEC to approve spot bitcoin ETFs, enabling people to invest in cryptocurrency without direct ownership.
Despite the SEC’s recent approval of its first bitcoin futures ETF, it has not yet authorized any spot bitcoin ETFs. Last year, Grayscale appealed to the courts, arguing that spot ETF applications should be evaluated the same way as futures ETF applications.
Judge Neomi Rao concurred, stating that the SEC’s rejection of Grayscale’s proposal was arbitrary and capricious due to the regulator’s failure to justify the different treatment of similar products. In response to the ruling, the SEC noted, “We are reviewing the court’s decision to determine next steps.”
Jennifer Rosenthal, spokesperson for Grayscale, celebrated the ruling as a significant achievement for crypto funds and digital asset managers, calling it “a monumental step forward for American investors, the bitcoin ecosystem, and all those advocating for bitcoin exposure through the added protections of the ETF wrapper.”
The future remains uncertain as to whether the SEC will appeal this decision or if it will lead to a wave of approved applications, as many investors are hopeful.