Grayscale Investments is urging the U.S. Securities and Exchange Commission (SEC) to promptly approve its proposed exchange-traded fund (ETF) that would track bitcoin. This call for approval follows a recent legal victory for Grayscale against the SEC.
Legal Victory Spurs Grayscale's Push for SEC Approval of Bitcoin ETF
In the legal case, a three-judge panel of the District of Columbia Court of Appeals ruled that the SEC had made a mistake in rejecting Grayscale's proposedbitcoin ETF without providing a clear explanation for its decision. This ruling prompted Grayscale to push for the SEC to review and approve its ETF application.
"We hope you will agree that the best use of resources now is for the (SEC) to issue an order approving" the product, Grayscale's law firm DavisPolk wrote in a letter which was filed with the SEC on Tuesday.
A spot bitcoin ETF would allow investors to gain exposure to bitcoin's price movements without actually owning the cryptocurrency. The SEC has previously denied all spot bitcoin ETF applications, citing concerns about the protection of investors from potential market manipulation.
However, Grayscale argued that the same market surveillance arrangement used for approved bitcoin futures ETFs should be sufficient for its spot ETF since both products rely on bitcoin's underlying price. The appeals court supported Grayscale's argument by ruling that the SEC's denial of Grayscale's application was arbitrary, as it failed to explain why the two arrangements were materially different.
SEC's Historical Rejections and Renewed Industry Hope
Finance Magnates reported earlier that the possibility of the United States getting its first spot Bitcoin (BTC) exchange-traded fund (ETF) has been a topic of interest in the crypto industry. In recent years, various companies have applied for a spot BTC ETF with the SEC, but all applications have been rejected due to concerns about fraud and market manipulation.
However, there has been renewed hope in the crypto industry that such an ETF might gain approval. In June, BlackRock, the world's largest asset manager, submitted an application for a BTC ETF, which subsequently led to other companies in the sector submitting similar proposals.
The recent order from the appellate court has raised the prospect of a spot BTC ETF becoming a reality in the United States. Still, it's crucial to note that this order simply instructs the SEC to review its decision regarding Grayscale's ETF proposal. There remains a possibility that the SEC could find other grounds for rejecting Grayscale's application, so the outcome is not guaranteed at this point. The industry will continue to watch closely for developments in the SEC's review process.
"If any other reason could be offered in attempting to differentiate" the two types of products "we are confident that it would have surfaced by now," DavisPolk wrote.
This article was written by Tareq Sikder at www.financemagnates.com.
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