Grayscale wins appeal against SEC paving way for possible spot-bitcoin ETF

financialpost.com:

Grayscale Investments LLC moved closer to launching a spot-based bitcoin exchange-traded fund in the U.S., a potential watershed moment in the cryptocurrency industry’s quest to tap billions of dollars from everyday investors.

A three-judge appeals panel in Washington on Aug. 29 overturned a decision by the U.S. Securities and Exchange Commission to block the ETF, which would be tied to the spot Bitcoin price.

The ruling marks a major legal win for the crypto industry and sent the price of bitcoin surging by as much as six per cent. The SEC could still fight the decision.

Grayscale has said converting to an ETF would help it unlock about US$5.7 billion in value from the US$16.2 billion trust by making it easier to create and redeem shares. More broadly, the crypto industry has long viewed the launch of an ETF based on the cryptocurrency itself, rather than futures, as a significant milestone.

In June 2022, the SEC rejected Grayscale’s conversion proposal arguing that an ETF based on bitcoin lacked adequate oversight to detect fraud. Grayscale sued to overturn the decision accusing the SEC of discriminating against its product, while approving similar bitcoin futures ETFs.

“The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” wrote Judge Neomi Rao.

The SEC didn’t immediately respond to a request for comment. In a statement, Grayscale called the decision “a monumental step forward for American investors.”

In its opinion, the court said that Grayscale “advanced substantial evidence” that its product was similar to bitcoin futures ETFs approved by the SEC, the opinion read. The underlying assets of both types of products are