- The court has sided with Grayscale against the SEC.
- The decision raises whether the SEC would be forced to approve Grayscale’s Bitcoin ETF application.
- The regulator has multiple options at its disposal despite Grayscale’s victory.
The Grayscale appeal of the U.S. SEC’s decision to deny its spot Bitcoin ETF application has been one of the most closely watched crypto legal battles in recent months for good reason.
It represents the first time the SEC’s market manipulation concern over a spot Bitcoin ETF product has been challenged in court. On Tuesday, August 29, the U.S. Court of Appeals for the D.C. Circuit ruled in favor of Grayscale, sparking excitement within the crypto community.
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Following the decision, will the SEC finally approve a spot Bitcoin ETF?
Potential Next Steps
The Grayscale ruling does not guarantee the approval of Grayscale’s application to convert its Bitcoin Trust (GBTC) to a spot ETF but only requests that the SEC review its decision. The regulator can choose to appeal or accept the ruling.
For an appeal, the SEC has a 45-day window to act, a move that would likely lead to an en banc hearing review. As explained by Bloomberg Intelligence’s James Seyffart, an en banc hearing review will bring the case before all the judges in the court, not just the subset of three involved in the current decision. Finance lawyer Scott Johnsson has meanwhile argued that this outcome is unlikely.
On the other hand, if the SEC accepts the ruling, it still reserves the right to deny Grayscale’s application again. A timeline is also not given for when the SEC should arrive at a new verdict on Grayscale’s application to convert its Bitcoin Trust (GBTC) to a spot ETF.
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Despite these possibilities, experts like Seyffart maintain that the ruling takes Grayscale one step closer to launching a spot Bitcoin ETF in the U.S.
Following the ruling, the price of Bitcoin has jumped about 5.5% from just over $26,000 to $27,435.61 at the time of writing as investors hope for a favorable outcome that could see trillions of institutional dollars flow into the nascent market.
On the Flipside
- The ruling does not guarantee the approval of Grayscale’s ETF application.
- The SEC’s response to Bitcoin ETF applications from Bitwise, BlackRock, VanEck, WisdomTree, and Invesco is expected this week.
Why This Matters
The ruling in the Grayscale case against the SEC represents a significant win for the crypto industry. It strengthens arguments that the agency has unfairly dismissed dozens of Bitcoin spot ETF applications.
Find out what a Former SEC chief is saying about the chances of a Bitcoin ETF approval:
SEC Unlikely to Approve Spot Bitcoin ETF: Ex-SEC Chief
Activity in the Polygon NFT ecosystem is soaring. Find out more:
Polygon 30-Day NFT Activity Eclipses Ethereum, Optimism, Arbitrum, Base
