SEC Decision Boosts Chances of Grayscale Bitcoin Trust Becoming an ETF
The United States Securities and Exchange Commission (SEC) has chosen not to appeal a recent court ruling that criticized the SEC’s rejection of Grayscale Investments’ application to create a bitcoin exchange-traded fund (ETF). This decision increases the likelihood that the Grayscale Bitcoin Trust could be converted into an ETF. The crypto industry has been closely monitoring this case as it strives to establish ETFs. Following the news, the price of Bitcoin experienced an immediate surge, surpassing $27,000.
SEC’s Rejection Ruled Arbitrary and Capricious
After the SEC denied Grayscale’s application, the company filed a lawsuit arguing that the agency had previously approved surveillance agreements for bitcoin futures-based ETFs. The DC Circuit Court of Appeals agreed with Grayscale, deeming the SEC’s denial “capricious” and “arbitrary.” The court stated that similar cases should be treated alike. It remains uncertain how the SEC will proceed with Grayscale’s application in light of this ruling.
Potential Implications for Investors
A spot bitcoin ETF would enable investors to gain exposure to Bitcoin without directly owning it. However, the SEC has rejected all spot bitcoin ETF applications thus far due to concerns about investor protection against market manipulation. Grayscale argues that its setup is similar to approved futures-based ETFs and should meet regulatory requirements.
Next Steps for Grayscale and Other Asset Managers
It is unclear how the SEC will handle Grayscale’s application moving forward. While they could still deny it on different grounds, Grayscale has the option to challenge this decision in court again. Other asset managers, including Fidelity, Invesco, and BlackRock, also have pending filings with the SEC. The agency must make a decision on these applications by next year at the latest.
Hot Take: Grayscale’s ETF Prospects Brighten as SEC Opts Not to Appeal
The United States Securities and Exchange Commission’s choice not to appeal a court ruling criticizing its rejection of Grayscale Investments’ bitcoin ETF application has increased the possibility of the Grayscale Bitcoin Trust becoming an ETF. This development has sparked optimism in the crypto market, leading to a surge in Bitcoin’s price. While uncertainties remain about how the SEC will proceed, this decision signifies a potential breakthrough for ETFs in the crypto industry. It also highlights the growing demand for investment products that provide exposure to cryptocurrencies while addressing regulatory concerns surrounding market manipulation and investor protection.
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