A landmark decision by the U.S. District of Columbia Court of Appeals sided with Grayscale, a prominent crypto investment firm, in their tussle with the Securities and Exchange Commission (SEC) regarding the launch of a bitcoin spot exchange-traded fund (ETF).
The court expressed concerns over the SEC’s inability to clearly justify their rejection of Grayscale’s proposal to list a direct bitcoin price-tracking ETF. This decision now mandates the SEC to revisit and reconsider its earlier stance.
In the wake of this verdict, bitcoin’s price surged by 5.3%, reaching $27,448.0 by early Wednesday, with Ethereum, another leading cryptocurrency, also experiencing a 4% uptick.
This favorable outcome for Grayscale could potentially be a game-changer for the crypto domain, possibly facilitating the premiere of a U.S. bitcoin spot ETF.
Historically, the SEC has been skeptical of such spot ETFs, having declined Grayscale’s proposition in June 2022, highlighting concerns surrounding anti-fraud measures and the safety of investors. Similar reasons were also given when turning down spot ETF applications from reputed entities like Ark, VanEck, and Fidelity.
In contrast to their reservations regarding spot ETFs, the SEC did approve bitcoin futures ETFs, which fixate on a predetermined cryptocurrency price. Grayscale’s contention was that if futures ETFs were deemed acceptable due to their investor protection systems, the same should apply to spot listings. The recent court ruling supported this viewpoint, indicating a close similarity between the two ETF types.
The regulatory body now faces a 45-day window to challenge the ruling.
Grayscale voiced their enthusiasm regarding this development, emphasizing its significance for those championing increased Bitcoin access through the secure framework of ETFs. Notably, Grayscale administers the Grayscale Bitcoin Trust, an instrument enabling investors to be involved with bitcoin indirectly.
Moreover, other significant players, such as Nasdaq Inc and BlackRock Inc—the latter being the globe’s dominant asset manager—had also recently shown interest in launching their spot bitcoin ETFs, most hinting at collaboration with Coinbase Global Inc, America’s leading crypto exchange, to oversee bitcoin trades and deter price manipulation.
However, even with the prospective appeal of a spot ETF introduction which could funnel considerable institutional funds into cryptocurrencies, the sector is concurrently tackling diminishing public enthusiasm.
Lately, bitcoin trade volumes touched their lowest in four years. The cryptocurrency’s momentum has noticeably decelerated in the recent past. Events like prominent scams and notable insolvencies have considerably eroded public trust in the crypto arena over the preceding year.
