- This decision likely signals a review of Grayscale’s application.
- Other asset managers, including BlackRock and Fidelity, await the SEC’s decisions on similar ETFs.
The US Securities and Exchange Commission (SEC) has chosen not to appeal a court’s stern rebuke of its initial denial to allow Grayscale to convert its Bitcoin trust into an exchange-traded fund (ETF). This decision raises the likelihood of the Grayscale Bitcoin Trust (GBTC) becoming the first Bitcoin ETF in the United States.
The implications of this decision have sent ripples through the financial world, with Bitcoin surging beyond $27,000 in response to the news, according to the data from CoinMarketCap.
The District of Columbia Court of Appeals in Washington delivered a significant verdict in August, declaring that the SEC was mistaken in declining Grayscale’s proposal for a Bitcoin ETF. The deadline for the SEC to contest the court’s decision was set to expire at midnight on Friday, Coindesk reported.
Grayscale’s Battle for a Spot Bitcoin ETF
The next steps for the SEC regarding Grayscale’s application remain uncertain. While the agency can still reject the application for other reasons, it will likely face legal challenges in doing so. Earlier, Grayscale stated that converting GBTC into an ETF would help eliminate the discount between the fund’s price and its underlying Bitcoin holdings.
Grayscale’s lawsuit centered on whether money managers could offer a spot Bitcoin ETF, providing retail investors with real-time exposure to Bitcoin’s price. While the SEC had previously approved ETFs based on Bitcoin futures, the regulator contended that Bitcoin trading on unregulated exchanges could be susceptible to market manipulation.
Despite the SEC’s stance on the cryptocurrency industry, the demand for a spot Bitcoin ETF has steadily increased. Several asset managers, including BlackRock, WisdomTree, and Valkyrie, have made attempts to enter this sector. The SEC is currently assessing numerous proposals to launch spot Bitcoin ETFs.