Focus |Get all the essential market news and expert opinions in one place with our daily newsletter.Receive a comprehensive recap of the day’s top stories directly to your inbox.| ( [Kitco News](/)) – Cryptocurrency prices are trending higher on Tuesday morning after a three-judge panel for the DC Circuit Court of Appeals handed Grayscale Investments a victory in its battle against the Securities and Exchange Commission (SEC), which must now review the firm’s application for a Bitcoin ( BTC ) exchange-traded fund (ETF).This was a highly anticipated development for the cryptocurrency industry as the creation of a spot BTC ETF has long been a goal of ardent digital asset proponents.
Dozens of applications have been filed over the years, but the SEC has rejected every application, citing the dangers of fraud and market manipulation.Grayscale sued the SEC in June 2022 after the regulator blocked the crypto-focused asset manager from converting its Bitcoin Trust (GBTC) to an ETF.A point of focus in the lawsuit was the fact that the SEC approved several ETFs that invested in Bitcoin futures contracts but had denied investors the ability to invest in products that hold Bitcoin directly.
Grayscale called the rejection of its ETF application by the SEC “arbitrary and capricious,” and petitioned the court to allow GBTC to be converted to an ETF that would be overseen and regulated by the SEC.Tuesday’s judgment granted Grayscale’s petition for review and ordered that “the commission’s order be vacated,” according to the filing.The SEC is now required to review Grayscale’s application, which it had previously rejected.In the opinion from Circuit Judge Neomi Rao, the judge said, “We Agree.The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products.
We therefore grant Grayscale’s petition and vacate the order.” Grayscale CEO Michael Sonnenshein announced the decision via X (formerly Twitter) and said the company is now reviewing the court’s opinion as it prepares to move forward.🚨 JUST IN 🚨— Sonnenshein (@Sonnenshein) The D.C.Circuit ruled in favor of [@Grayscale]in our lawsuit challenging the SEC’s decision to deny [$GBTC]’s conversion to an ETF! Thank you to everyone who has been on this journey with us, especially our investors.We are grateful for your support and… [August 29, 2023] A spokesperson for Grayscale said, “This is a monumental step forward for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper,” and said Grayscale “will be pursuing next steps with the SEC” after reviewing the opinion.
The SEC has 45 days to appeal the ruling, and if they elect to do so, the case would eventually wind up in front of the Supreme Court or an en banc panel review.The ruling means the regulator must review Grayscale’s application, but there is no guarantee that the SEC will ultimately approve the conversion of GBTC into an ETF.According to Bloomberg Intelligence ETF analyst James Seyffart, an en banc review “basically means the case is heard by ALL judges on the court (17 here) rather than just the subset panel of 3 judges like this initial decision.” Seyffart noted that the ruling “DOES NOT mean GBTC is automatically converting into an ETF,” but said, “it certainly brings things one step closer.” “There is nothing in here giving us any timelines on when the SEC has to issue another order,” he added.“So I am not sure on timelines.
I was initially thinking something like a deadline of 45 days or 60 days but nothing in here saying that.” | | “Despite the inevitable SEC appeal, to our mind there is no doubt now, spot BTC ETFs are coming to the U.S.,” said Tim Bevan, CEO of ETC Group.“We don’t believe the SEC will act as kingmaker and the most likely outcome is a block approval of applications that meet requirements, probably in Q1’24.The level of pent up institutional and retail demand in the US is significant and we expect this to have a positive impact on the price of Bitcoin as can be seen from today’s price reaction, as well as further accelerate the global trend towards acknowledging crypto as a new asset class.” After news of the ruling broke, Bitcoin’s price rose sharply, spiking to a daily high of $27,765 before pulling back to $27,350, representing a 4.6% gain on the 24-hour chart.BTC/USD Chart by TradingView.
