The US Court of Appeals has approved Grayscale’s request for review in its case against the Securities and Exchange Commission (SEC) regarding a bitcoin ETF. A three-judge panel from the DC Circuit Court of Appeals has sided with Grayscale Investments in its legal battle.
Grayscale’s victory on this occasion follows their lawsuit against the SEC in June 2022, after the regulatory body prevented the conversion of Grayscale’s Bitcoin Trust (GBTC) into an ETF. The company argued that the SEC’s decision to approve ETFs focused on bitcoin futures contracts while rejecting products directly holding bitcoin was arbitrary and without basis.
The court’s judgment granted Grayscale’s request for review and directed the commission to annul its previous order. This mandates the SEC to re-evaluate Grayscale’s application that it had previously turned down.
CEO of Grayscale, Michael Sonnenshein, shared on Twitter that their legal team is actively assessing the court’s ruling. A spokesperson for Grayscale stated that this outcome is a significant advancement for American investors and the bitcoin ecosystem, emphasizing the value of an ETF structure for added protection.
Following the court’s decision, the price of bitcoin experienced a notable increase, surpassing $27,000 from its initial value of approximately $26,100 earlier that day, according to TradingView data.
This ruling builds upon the industry’s anticipation that Grayscale could emerge victorious in its legal battle against the SEC. During oral arguments in March, Grayscale’s legal strategist, Donald Verrilli Jr., highlighted the strong correlation between bitcoin futures and spot markets. The court’s filing echoed this sentiment, noting that the SEC did not contest the evidence of a 99.9% correlation between these markets.
Emily Parise, representing the SEC, had expressed uncertainty about the causal relationship between bitcoin futures and spot markets, indicating it as a pivotal empirical question.
Although this decision is a significant win, the subsequent steps remain uncertain. Industry experts have speculated that if the court deems the SEC’s denial of GBTC’s conversion inadequate, the commission might potentially reject it using different reasoning.
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