The Grayscale Bitcoin Trust (OTCMKTS:GBTC), Bitcoin (BTC-USD) and other cryptocurrencies across the board are surging higher after the District of Columbia Court of Appeals sided with Grayscale in a lawsuit against the Securities and Exchange Commission (SEC). The court ruled that the SEC was wrong to reject Grayscale’s application. GBTC was launched in 2013 and charges a 2% management fee today. The fund is no small fish, as it has $16 billion in assets under management.
Grayscale sued the SEC in June of 2022 after the commission rejected its plan to convert its Bitcoin fund into an exchange-traded fund (ETF). Applications from Cathie Wood’s ARK Invest and Fidelity were rejected as well. In all cases, the SEC questioned whether the companies behind the ETFs offered enough protection to investors. After the rejections, the SEC later approved Bitcoin futures ETFs.
“The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs (exchange-traded products) but not Grayscale’s proposed bitcoin ETP,” said the D.C. court. “In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”
GBTC Alert: Grayscale Bitcoin Trust Surges on Bitcoin ETF Ruling
After the news broke, the SEC announced that it would review the decision and work on its next steps, which include up to 45 days to appeal the decision. If the SEC chooses to not appeal, it’s up to the court to decide how the decision should be enacted. According to Reuters, that includes “instructing the SEC to approve the application, or to revisit Grayscale’s application, in which case the SEC could still reject the proposal on other grounds.”
While this is good news, it does not mean that the SEC has approved Grayscale’s Bitcoin ETF application yet. However, CoinRoutes CEO Dave Weisburger believes that the ruling could lead to approval for Grayscale and other Bitcoin ETF application filers: “It virtually guarantees they will approve BlackRock and Fidelity. Grayscale may need to refile, but they will almost certainly be approved as well.”
Meanwhile, Grayscale disclosed that it would review the ruling and plan its next steps with the SEC.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
