Tech
US Court Says SEC Wrong to Deny Grayscale’s Spot Bitcoin ETF Proposal
(CTN News) – In a historic decision, a federal appeals court ruled that the U.S. Securities and Exchange Commission (SEC) should have granted approval to Grayscale Investments to create a spot bitcoin exchange-traded fund (ETF).
This ruling is a significant victory for the asset management firm and holds the potential to set a precedent for introducing the first-ever product of this kind.
A panel of judges in the District of Columbia Court of Appeals in Washington determined that the SEC’s rejection of Grayscale’s proposal was arbitrary and lacking in justification. The core issue was the SEC’s failure to explain the differing treatment of BTC futures ETFs and spot bitcoin ETFs.
As a result of this ruling, the price of bitcoin, the largest cryptocurrency globally, experienced a surge of 5.75%, reaching $27,609 shortly after the announcement.
The court’s decision holds promising implications for the cryptocurrency market, especially for bitcoin. A spot bitcoin ETF would offer investors the opportunity to gain exposure to the digital asset without purchasing actual bitcoins through a retail exchange or handling the asset within a separate crypto wallet.
A representative from Grayscale expressed the significance of the ruling in a statement, emphasizing that this is a crucial step forward for American investors and the broader Bitcoin ecosystem.
The approval of a spot BTC ETF comes with added regulatory safeguards and protections for investors, which makes it an attractive option for those seeking exposure to cryptocurrencies.
Grayscale’s spokesperson indicated that the company is actively reviewing the details outlined in the court’s opinion and is planning the next steps in collaboration with the SEC.
The decision marks a significant turn of events after the SEC rejected Grayscale’s application for a spot bitcoin ETF in the previous year. During that time, the regulatory body argued that the proposal did not meet the required anti-fraud and investor protection standards.
Notably, the SEC cited similar reasons for rejecting numerous other applications for similar products, including those submitted by industry giants like Fidelity and VanEck.
In defense of its proposal, Grayscale pointed out that the SEC had already approved surveillance agreements to prevent fraud in the case of bitcoin futures-based ETFs.
The company argued that this same surveillance setup should be deemed acceptable for its spot fund, given that both spot and futures funds rely on bitcoin pricing.
The impact of this ruling extends beyond Grayscale and has the potential to reshape the regulatory landscape for cryptocurrency-related investment products.
As the industry evolves, market participants closely watch how this decision could open up new avenues for investors to engage with cryptocurrencies through established financial instruments.
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