The DC Circuit Court of Appeals has officially concluded a legal dispute between the United States (US) Securities and Exchange Commission (SEC) and Grayscale, thereby affirming a final ruling that effectively instructs the agency to reconsider its rejection of the asset manager’s application for a spot Bitcoin exchange-traded fund (ETF).
This formal closure of the case, solidifies the court’s initial decision made two months ago, where it deemed the SEC’s prior rejection of Grayscale’s attempt to convert its Grayscale Bitcoin Trust (GBTC), valued at approximately $17 billion, into a spot ETF as “arbitrary and capricious.”
Spokeswoman Jennifer Rosenthal said during the conclusion of the case:
“The Grayscale team looks forward to continuing to work constructively with the SEC to convert GBTC to an ETF. GBTC is operationally ready, and we intend to move as expeditiously as possible on behalf of our investors.”
Notably, the SEC opted not to appeal this ruling, rendering the recent action a mere formality.
The spotlight now turns back to the SEC, where the agency faces a choice regarding Grayscale’s application—whether to approve it or potentially reject it on alternative grounds.
Concurrently, the SEC is in the midst of evaluating several other applications for spot Bitcoin ETFs, including submissions from asset management firms such as BlackRock, Fidelity, and Franklin Templeton.
Approval of these ETFs carries significant implications, as it is perceived as a potential turning point by digital asset proponents who assert that broader accessibility could pave the way for mainstream acceptance of what has historically been viewed as a lightly regulated speculative niche.
It is worth noting that industry controversies and high-profile insolvencies, such as the FTX exchange collapse, have collectively eroded the estimated value of the sector by over 50% since late 2021, reducing it to approximately $1 trillion, with Bitcoin constituting approximately half of this total.
As news of these developments emerges, Bitcoin surged above $31,000 on Monday, reaching a threshold last witnessed in July, with expectations that these regulatory developments will facilitate the path for ETF adoption.
The cryptocurrency market is vigilantly observing the efforts of asset managers to secure approval for these ETFs, as evidenced by a recent market spike when an erroneous report suggested that BlackRock had received SEC approval for its long-anticipated Bitcoin ETF.
This enthusiasm waned once BlackRock clarified that its application remained under review.
BlackRock is one of about a dozen firms actively pursuing authorisation to offer such products.