Crypto experienced an unexpected triumph on Aug 29th when a U.S. appeals court sided with Grayscale in their legal battle against the SEC, which had previously rejected their spot Bitcoin ETF application last year. This development significantly enhances the likelihood of approval for spot Bitcoin ETF applications submitted by companies such as BlackRock and Fidelity, among others.
Key takeaways from Grayscale vs. SEC include:
- The D.C. Court of Appeals vacating the SEC's denial of Grayscale's Bitcoin ETF conversion, citing it as "arbitrary and capricious."
- The unanimous decision by a three-judge panel is notable as federal circuit courts rarely find agencies in violation of the Administrative Procedures Act.
- The core of the debate centered on Grayscale's argument that CME's surveillance arrangements for Bitcoin futures ETF should apply to their spot ETF, while the SEC contended otherwise.
- The court emphasized two key points: the similarity between Grayscale's spot ETF and approved Bitcoin futures ETPs, and the SEC's rejection lacking a coherent rationale.
- Both parties have 45 days to appeal, and the SEC may have other means to reject the application.
- Grayscale intends to pursue an ETF conversion upon court victory.
- The mid-October appeal timing coincides with the SEC's response deadline for other Bitcoin spot ETF applications.
We’ve attached the full court decision for further information.