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Grayscale wins appeal over US spot bitcoin ETF

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Regulatory news from the US’s DC Circuit found the US Court of Appeals ruling in favour of crypto asset manager Grayscale’s lawsuit challenging the SEC’s decision to deny the conversion of GBTC to an ETF. 

The firm writes that this is a monumental step forward for American investors, the bitcoin ecosystem, and all those who have been advocating for bitcoin exposure through the added protections of the ETF wrapper.

“At this time, the Grayscale team is reviewing the details outlined in the Court’s opinion and will share more information on next steps in the ETF conversion process as soon as practicable,” the firm says.

The news means that the US might be a step closer to seeing a spot bitcoin ETF.  Commenting on the news, VettaFi’s Roxanna Islam, Associate Director of Research, says: “Grayscale’s win is a huge victory for all potential spot bitcoin ETFs—not just for Grayscale. While we will still have to wait and see how the SEC handles its execution, it is likely that they will have to approve Grayscale’s spot ETF along with other pending spot bitcoin ETF filings.”

Greg Moritz, Chief Operating Officer at the crypto Hedge Fund AltTab Capital, describes the breakthrough as a huge win for Grayscale and the industry.  Moritz says:  “It’s excellent that the judge in the Grayscale vs SEC case was able to see the obvious correlation between bitcoin futures and spot price. Products like Grayscale’s holdings have converted to ETFs in other commodity markets, and it makes no sense to treat crypto differently. Rules for financial markets need to be based on data, not arbitrary and capricious sentiment toward a legitimate and growing asset class.”

Giving the European perspective, Tim Bevan, CEO at the crypto ETP provider ETC Group described the judgement as ‘a major victory against the US Securities and Exchange Commission in its efforts to convert its over-the-counter GBTC application into a listed Bitcoin ETF.’

Bevan says: “Despite the inevitable SEC appeal, to our mind there is no doubt now, spot BTC ETFs are coming to the US. We don’t believe the SEC will act as kingmaker and the most likely outcome is a block approval of applications that meet requirements, probably in Q1’24. The level of pent up institutional and retail demand in the US is significant and we expect this to have a positive impact on the price of bitcoin as can be seen from today’s price reaction, as well as further accelerate the global trend towards acknowledging crypto as a new asset class.”

Read the full ruling here.

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