The United States Securities and Exchange Commission (SEC) declined to appeal court loss in a case involving Grayscale Investments’ Spot Bitcoin exchange-traded fund (ETF) proposal. This development has generated enthusiasm among Grayscale and the broader crypto industry.
A spot ETF is an exchange-traded fund that tracks the price of an underlying asset, such as Bitcoin, in real time. It gives investors exposure to the price of Bitcoin without having to buy and store the crypto themselves.
Grayscale first applied to convert Grayscale Bitcoin Trust (GBTC) to an ETF in October 2021. Since then, it has been trying to get its Spot Bitcoin ETF approved. “The Grayscale team remains operationally ready to convert GBTC to an ETF upon the SEC’s approval, and we look forward to sharing more information as soon as practicable,” said a Grayscale spokeswoman in an email to a publication.
The SEC has rejected Grayscale’s spot ETF proposals in the past. It argued that the Bitcoin market's high volatility and susceptibility to manipulation make it unsuitable for a spot ETF.
However, in August 2022, the District of Columbia Court of Appeals in Washington ruled that the SEC had ‘arbitrarily’ and ‘capriciously’ rejected Grayscale’s Spot Bitcoin ETF proposal. The court ordered the SEC to reconsider Grayscale’s proposal.
Grayscale is not the only firm with pending spot ETF applications. Several other asset management firms, including BlackRock, Invesco, Bitwise, and Valkyrie, are also pursuing crypto spot ETF applications.
On Oct 16, a crypto trade publication tweeted that the SEC had approved an application by BlackRock (BLK) to launch a Spot Bitcoin ETF. The price of Bitcoin spiked to more than $30,000 following that. A BlackRock spokeswoman clarified that the application is still under review. The publication deleted its tweet and apologised.
The recent decision by the SEC to not appeal the court's ruling means that Grayscale's proposal for a Spot Bitcoin ETF will be reconsidered. If the proposal is approved, it would be a significant win for the cryptocurrency industry and could result in more investments being made in Bitcoin. However, it is essential to note that the SEC is not obligated to approve the proposal.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash