Putting SEC on the backfoot, the court instructed the regulator to take another look at Grayscale’s application. This authority has been opposing the idea of listed spot-market Bitcoin investments, despite approving them for futures, for a long time.
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Judge Neomi Rao, Source: Ballotpedia
SEC argues it cannot approve a spot Bitcoin Etf as there is no regulated crypto market that can prevent irregularities. However, Judge Neomi Rao opined:
The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products.
Essentially, the court found the SEC did not substantiate why it approved future-based funds but not a bitcoin ETF and failed to submit convincing arguments to the risks underlying such a move. A spokesperson for Grayscale said:
This is a monumental step forward for American investors, the bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper.
The ruling also noted that the SEC received several requests to list bitcoin products on exchanges and denied them all. However, in June this year, investment giant BlackRock requested to list a spot bitcoin ETF, stirring speculations that the regulator will start approving these applications.
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