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Grayscale Prevails Over SEC
Grayscale has secured a major win against the US SEC in its efforts to convert its flagship Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
In the landmark ruling, U.S. Court of Appeals Circuit Judge Neomi Rao ordered Grayscale’s petition for review be granted and the SEC’s order to deny the GBTC application to be vacated.
“The Securities and Exchange Commission recently approved trading two bitcoin futures funds on national exchanges but denied approval of Grayscale’s bitcoin fund. Petitioning for review of the Commission’s denial order, Grayscale maintains its proposed bitcoin exchange-traded product is materially similar to the bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca. We agree,” she stated.
The SEC failed to explain why it treated these investment vehicles differently, making the Grayscale rejection “arbitrary and capricious,” she added.
In late June 2022, the SEC denied Grayscale’s application to convert GBTC into a spot ETF. Grayscale’s senior legal strategist, General Donald B. Verrilli Jr., filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit the very next day. At the time, Grayscale CEO Michael Sonnenshein expressed that the company was “deeply disappointed” and “vehemently disagreed” with the SEC’s move.
A physically-backed Bitcoin ETF does not yet exist in the U.S. market because America’s top financial cop has been reluctant to greenlight one — citing market manipulation as the main reason. The SEC currently has over a dozen applications to review, and investors appear to be keen on such an offering.
It’s worth noting that today’s order did not instruct the SEC to immediately grant the regulatory blessing to Grayscale’s request to list its spot ETF but instead to review the application again.
Nonetheless, Michael Sonnenshein, CEO of Grayscale Investments, celebrated the ruling on social media:
“The D.C. Circuit ruled in favor of @Grayscale in our lawsuit challenging the SEC’s decision to deny $GBTC’s conversion to an ETF! Thank you to everyone who has been on this journey with us, especially our investors. We are grateful for your support and encouragement.”
At the moment, Grayscale’s attorneys are evaluating their next options. Sonnenshein indicated that additional updates would be made via the asset manager’s official social media channels as soon as possible.
BTC Pushes Beyond $27K
Today’s news seems to have renewed optimism that a spot Bitcoin ETF will eventually be available in the United States. Grayscale and the SEC have 45 days to appeal today’s court decision.
Bitcoin managed to top the $27,000 level following the verdict. The premier cryptocurrency is up by 6.76% over the last 24-hour period, currently changing hands at $27,917.28, per CoinGecko data. Other top crypto assets have seen similar advancement, with coins like Ethereum, BNB Coin, and XRP up over 4% during that same span.
That being said, BTC is still down 60.11% from its November 2021 lifetime high of $69,044.77.