US SEC Will Not Appeal Court Decision on Grayscale Bitcoin ETF
SEC to Review Grayscale’s Bitcoin ETF Application
The U.S. Securities and Exchange Commission (SEC) has decided not to appeal a recent court ruling that found its rejection of Grayscale Investments’ application to create a spot bitcoin exchange-traded fund (ETF) was wrong, according to a source familiar with the matter.
The court ruling, issued by the District of Columbia Court of Appeals in Washington, stated that the SEC acted incorrectly in rejecting Grayscale’s proposed bitcoin ETF. This case has been closely monitored by the industry, which has been attempting to advance similar products for the past decade.
With the SEC’s decision not to appeal, it is likely that Grayscale’s application will now be reviewed by the agency.
Spot Bitcoin ETF and the SEC’s Concerns
A spot bitcoin ETF would provide investors with exposure to the world’s largest cryptocurrency without requiring them to own it directly. However, the SEC has consistently denied all spot bitcoin ETF applications, including Grayscale’s, on the grounds that the applicants have not demonstrated the ability to protect investors from market manipulation.
Grayscale filed a lawsuit against the SEC, arguing that the agency had previously approved surveillance agreements to prevent fraud in bitcoin futures-based ETFs. Grayscale contended that the same setup should be sufficient for its spot ETF, as both spot and futures funds rely on bitcoin’s price.
The appeals court sided with Grayscale, ruling that the SEC had arbitrarily denied the application without explaining the material differences between the two arrangements.
Implications for Other Asset Managers
Several other asset managers, including BlackRock, Fidelity, and Invesco, have similar filings pending with the SEC for a spot bitcoin ETF. The SEC is expected to make decisions on these applications by next year at the latest.
Overall, the SEC’s decision not to appeal the court ruling represents a significant development in the long-standing effort to establish a spot bitcoin ETF. It remains to be seen how the agency will now proceed with Grayscale’s application and the potential impact on the broader cryptocurrency industry.
