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The Securities and Exchange Commission (SEC) will not challenge a court ruling favoring Grayscale’s proposed spot bitcoin exchange-traded fund (ETF).
On October 14 bitcoin-etf#xj4y7vzkg” target=”_blank” rel=”noreferrer noopener”>update Bloomberg citing an inside source has revealed that the SEC has chosen not to appeal the District of Columbia Court of Appeals’ decision from August, which argued that the regulator had erred in dismissing Grayscale’s bitcoin exchange-traded fund application.
The case has been under the industry microscope as various players in the financial landscape have competed for the approval of spot bitcoin ETFs in recent times.
The SEC’s surprising decision to step back may well set the stage for a thorough review of Grayscale’s proposal.
The investment giant’s proposed ETF is designed to expose clients to bitcoin (btc), the world’s leading cryptocurrency by market capitalization, without requiring direct ownership.
Previously, the SEC bitcoin-exchange-traded-funds.html” target=”_blank” rel=”noreferrer noopener”>frustrated all detect bitcoin ETF applications, including Grayscale’s, on the premise that applicants would not be able to adequately protect investors from potential market manipulation.
Things escalated when Grayscale bitcoin-fund-into-etf.html” target=”_blank” rel=”noreferrer noopener”>challenged The SEC’s ruling in court, stating that previously approved oversight mechanisms to counter fraudulent activities in bitcoin futures-based ETFs should also apply to its proposed spot ETF.
The appeals court reinforced Grayscale’s position, stating that the SEC failed to explain the substantial difference between the two configurations. Instructions on how the court’s decision should be implemented are anticipated, likely directing the SEC to review Grayscale’s application.
This development could also affect other financial giants like BlackRock and Fidelity, which have similar applications pending for a spot bitcoin ETF.
With the SEC expected to make decisions on these applications no later than 2024, the landscape of cryptocurrency-based financial products could be on the verge of a paradigm shift. At the time of writing, representatives from Grayscale and the SEC had not provided any comment on this development.
