The recent court decision favoring Grayscale Investments over the U.S. Securities and Exchange Commission (SEC) has garnered attention within the crypto industry. The District of Columbia Court of Appeals criticized the SEC’s denial of Grayscale‘s spot bitcoin ETF application, marking a significant move as the sector has been striving to introduce such products for ten years. The SEC’s choice not to challenge the verdict potentially sets the stage for re-evaluating Grayscale‘s proposal.
According to a recent article by Bloomberg and Reuters, the SEC will not appeal the court decision that paves the way for Grayscale to launch a spot Bitcoin exchange-traded fund. The ruling was made by just three of the judges on the court and the regulator could have sought a review by a fuller slate of judges. The agency is not planning to any other appeals in the case, said the person, who asked not to be identified, discussing the ongoing matter
While Grayscale remained tight-lipped post-ruling, the approval of a spot bitcoin ETF can offer investors a gateway to the leading cryptocurrency without direct ownership. Historically, the SEC has turned down all such applications, citing insufficient measures to shield investors from market malpractices.
Grayscale‘s lawsuit against the SEC underscored the agency’s inconsistent stance, as it had earlier green-lighted certain monitoring agreements to curb fraud in bitcoin futures-based ETFs. Grayscale contended that a similar framework should suffice for its spot ETF, given both types hinge on bitcoin’s pricing. The court sided with Grayscale, admonishing the SEC for its unexplained differentiation between the two setups, and is anticipated to outline the execution of its decision, likely urging the SEC to reconsider Grayscale‘s proposal.
This legal tussle, along with others in the queue, like those from BlackRock, Fidelity, ARK Investment, and Invesco, reflects a larger narrative within the U.S. crypto sphere. The unfolding reactions online suggest that such lawsuits might nudge the SEC towards a more defined regulatory framework, which could, in turn, bolster the advancement and legitimacy of crypto-based financial products in the U.S. This case, in particular, showcases a possible shift in the regulatory landscape, hinting at a more favorable outlook for similar crypto endeavors awaiting SEC’s nod.
