By
Chimamanda U. Martha
June 28th, 2024
Grayscale’s victory over the US SEC marks a milestone event which can open up the gates of approval for the spot Bitcoin ETF.
On Tuesday, August 29, Bitcoin and the broader crypto market registered a strong recovery with the BTC price shooting more than 7%. As of press time, Bitcoin is trading 5.42% up at a price of $27,452 and a market cap of $534 billion. The development comes as the US Court of Appeals for the D.C. Circuit sided with Grayscale over its lawsuits against the US Securities and Exchange Commission (SEC) over the conversion of GBTC to a spot Bitcoin ETF.
This is a milestone development as it could also impact the SEC’s decision over spot Bitcoin ETF applications by BlackRock, Fidelity, and others.
Grayscale’s victory provides a major catalyst to Bitcoin which otherwise has been entering a strong consolidation. In recent weeks, the volatility in bitcoin trading reached its lowest point in over four years. This decline can be attributed to investors holding back while seeking regulatory clarity regarding cryptocurrency activities. This clarity could come from either new legislative measures from Congress or the approval of a spot bitcoin ETF.
Trading a spot bitcoin ETF would involve using a conventional stock exchange. In this setup, a brokerage holds the bitcoin while enabling investors to access the largest cryptocurrency globally without needing to possess the actual coin. Crypto enthusiasts believe that the potential approval of a spot bitcoin ETF is likely to pave the way for increased institutional adoption in the mainstream. Turning down SEC’s rejections, the court said:
“The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP. In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”
“We are reviewing the court’s decision to determine next steps,” the SEC said in a statement.
Bitcoin ETF: A Matter of Time
The current ruling reinforces the inevitability of a Bitcoin ETF being established in the United States. To ensure the ongoing growth of digital assets, accessibility to all investors is crucial. We hold the perspective that the ETF framework can enhance access and transparency in cryptocurrency investment, effectively contributing to democratizing this asset class.
According to a spokeswoman from Grayscale, Tuesday’s verdict represents a significant stride for American investors, the Bitcoin ecosystem, and those who have been advocating for Bitcoin exposure with the added safeguards offered by the ETF structure.
“The Grayscale team and our legal advisors are actively reviewing the details outlined in the Court’s opinion and will be pursuing next steps with the SEC. We will share more information as soon as practicable,” the spokesperson added.
Shares of Grayscale Bitcoin Trust (GBTC) rallied on Tuesday surging 17% and closing at $20.56. The stock marked the highest single-day gains with over 19 million in trading volumes. With yesterday’s price surge, GBTC has reduced its discount to the value of the fund’s underlying token holdings by 18%. Last December, this gap was at 50%.