Grayscale, the manager of the Grayscale Bitcoin Trust (GBTC), has secured a pivotal win against the U.S. Securities and Exchange Commission (SEC).
This victory follows last month’s favorable ruling for Ripple and is seen as another stepping stone towards the creation of a spot Bitcoin Exchange-Traded Fund (ETF).
Last year, the SEC rejected Grayscale’s application to convert its GBTC into an exchange-traded fund (ETF), citing that the proposal did not meet anti-fraud and market manipulation requirements. However, this week, a federal court ruled in favor of Grayscale, directing the SEC to reconsider its previous decision.
THIS JUST IN: The D.C. Circuit ruled 3-0 in favor of Grayscale and $GBTC. This is a monumental step forward for all who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper. Read the decision: https://t.co/ulAtcsad2G pic.twitter.com/BNZABvM7tw
— Grayscale (@Grayscale) August 29, 2023
ETFs are traded on exchanges, akin to traditional equities, and they track the performance of an underlying asset. Their popularity has surged recently because they provide market participants with the opportunity to invest in cryptocurrencies without needing to buy the digital assets themselves.
However, it is essential to note that while the court’s decision is a positive step forward, it does not permit the immediate conversion of the GBTC product into an ETF. It does, however, provide a solid foundation for Grayscale to be treated on par with other Bitcoin ETF applicants.
The first review for approval is likely to commence as early as next week, with the final SEC review continuing into early 2024. Market analysts from Bernstein have previously expressed that they expect a spot Bitcoin ETF market to be substantial, possibly reaching 10% of Bitcoin’s market cap in two to three years.