The District of Columbia Court of Appeals delivered a favorable verdict for Grayscale on Tuesday, reversing the Securities and Exchange Commission’s (SEC) earlier refusal to allow the company’s Grayscale Bitcoin Trust, known by its ticker GBTC, to become an exchange-traded fund (ETF).

See related article: SEC accepts BlackRock’s Bitcoin ETF application for review

Fast facts

  • Following the court’s decision, the cryptocurrency market showed an upbeat response. Bitcoin surged more than 5%, trading at US$27,436 by 11:15 p.m. in Hong Kong, according to CoinMarketCap data. Meanwhile, STX, the token for the Bitcoin layer-2 solution, Stacks, saw a 14.6% jump to US$0.51.
  • This pivotal ruling not only serves as a beacon of optimism for Grayscale but may also chart the course for other financial heavyweights, such as BlackRock and Fidelity, waiting in the wings for the SEC’s decision on their own spot Bitcoin ETF applications.
  • Grayscale’s dispute with the SEC dates back to June 2022, following the commission’s approval of ProShares’ futures-based Bitcoin ETF in October of the previous year. Grayscale aimed to launch its own ETF, uniquely underpinning the fund directly with Bitcoin rather than relying on Bitcoin derivatives.
  • The SEC, however, dismissed their application in the subsequent summer, raising alarms over potential market manipulations and the robustness of investor safeguards.

See related article: Crypto gets a boost following reports of Fidelity’s imminent Bitcoin spot ETF filing