Digital Assets: Grayscale’s Stand Upheld; Court Rules Against SEC In Bitcoin ETF Conversion Lawsuit

August 30, 2023 | Digital Assets, News, Regulations

However, the SEC may prefer an appeal against the ruling in favor of Grayscale.

Grayscale, the digital asset management firm, has emerged victorious in its legal battle against the Securities and Exchange Commission (SEC). The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale, directing the SEC to overturn its previous denial of Grayscale’s Bitcoin (BTC) spot ETF application.

Grayscale’s argument rested on the SEC’s approval of Bitcoin futures ETF surveillance, which it believed could be extended to a spot ETF, negating concerns about market manipulation. The judge criticized the SEC for inconsistent treatment of similar products and deemed its denial of Grayscale’s proposal as arbitrary and capricious. Grayscale initially sought to convert its GBTC fund to an ETF in 2021, which the SEC rejected due to market manipulation fears. Grayscale filed an appeal against this decision and has now secured a significant victory. (Cryptonews)

This ruling holds substantial implications, particularly in light of institutional investment in Bitcoin this year. BlackRock (NYSE: BLK) and other major firms have applied for spot Bitcoin ETFs, bolstering Bitcoin’s price to over $31,000. After Grayscale’s legal triumph, this price could be overtaken according to market analysts.

At the time of writing, bitcoin is trading at $27,445, up nearly 6% over 24 hours. Coinbase (NASDAQ: COIN) surged nearly 15% yesterday to $84.70.

The SEC has the option to appeal within 45 days or undergo a review process, during which it must clarify the distinctions between spot ETFs and futures ETFs. “We are reviewing the court’s decision to determine next steps,” the SEC said in a statement.

Grayscale’s win doesn’t guarantee approval for pending ETF applications, but it signals progress in a challenging regulatory landscape.

Related Story:  Grayscale Protests SEC Rejection Of Spot Bitcoin ETF, Files Suit Against Regulator

Image by Gerd Altmann from Pixabay

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