U.S. Appeals Court Orders SEC to Review Grayscale’s Bitcoin ETF Application

The U.S. Appeals Court has directed the Securities and Exchange Commission (SEC) to revisit Grayscale Investments’ application for a spot Bitcoin exchange-traded fund (ETF). The court’s decision is seen as a significant boost for Grayscale and could have far-reaching implications for the cryptocurrency market. Here’s a breakdown of the key points:

The U.S. Court of Appeals for the D.C. Circuit has ordered the SEC to review Grayscale Investments’ request for a spot Bitcoin ETF. This decision highlights the court’s view that Grayscale’s proposal shares similarities with already-approved Bitcoin futures ETFs, making it deserving of approval.

SEC’s Lack of Appeal:

The court’s ruling came after the SEC failed to file an appeal within the 45-day deadline following its earlier decision to support Grayscale. This lack of appeal signaled the court’s direction and prompted Grayscale to resubmit its application to convert its flagship GBTC fund into a full-fledged ETF.

The court’s mandate aligns with Grayscale’s argument that its proposed Bitcoin ETF is comparable to authorized Bitcoin futures ETFs and should not face unnecessary hurdles. Grayscale has taken an unconventional approach by resubmitting its application through an accelerated S-3 filing process and plans to list its shares on NYSE Arca upon approval.

While the court’s decision favors Grayscale, the SEC’s future actions remain uncertain. The SEC has a reputation for thorough scrutiny, and it can still find reasons to reject applications, keeping market participants vigilant.

Grayscale is not alone in pursuing a Bitcoin ETF. Industry giants like BlackRock and Fidelity have also entered the race, reflecting the increasing demand for these financial products. SEC Chairman Gary Gensler emphasized the agency’s commitment to a rigorous review process similar to public offerings.

Market Impact:

The court’s decision positively impacted the cryptocurrency market. Bitcoin and related equities, including Microstrategy (MSTR), Riot Platforms (RIOT), Marathon Digital Holdings (MARA), and Coinbase Global (COIN), saw gains. Bitcoin’s price surged by 16%, surpassing $35,000 on Monday night.

The U.S. Appeals Court’s directive to the SEC to review Grayscale’s Bitcoin ETF application has bolstered hopes for broader cryptocurrency market access. As industry giants vie for a piece of the Bitcoin ETF pie, the SEC faces balancing innovation and investor protection in this rapidly evolving space.