The value of cryptocurrency assets increased on Tuesday as a US judge cleared the way for the country’s first bitcoin exchange-traded fund. The decision marks a watershed moment for cryptocurrency investors and a defeat for the SEC, which has been attempting to reign in the digital asset market.
The DC Court of Appeals’ three-judge panel overturned an SEC ruling denying Grayscale Investments authorization to operate a bitcoin-focused ETF. According to the decision, the regulator failed to fully explain why it denied the firm’s application. Judge Neomi Rao concluded “The Commission’s denial of Grayscale’s proposal was arbitrary and capricious because it failed to explain its different treatment of similar products,”. The SEC said Tuesday that it was “reviewing the court’s decision to determine next steps.”
The announcement boosted the value of major cryptocurrency tokens. Bitcoin values, which have been particularly volatile in recent weeks, increased by 7% to roughly $28,000. Coinbase (COIN), the largest publicly listed crypto exchange in the United States, increased by 15%. The Grayscale Bitcoin Trust, or GBTC, the bitcoin fund at the centre of the dispute, was up 17%.
Grayscale contended that their plan was too similar to other bitcoin investment products previously approved by the SEC. The other two bitcoin products, Valkyrie and Teucrium, are futures contracts on the Chicago Mercantile Exchange. The judges stated that Grayscale had offered “uncontested evidence” that the underlying assets — bitcoin and bitcoin futures — were practically similar.
The decision opens the way for an investment product that investors have been clamoring for for years. A spot bitcoin ETF would provide traditional investors exposure to bitcoin without really owning it. Grayscale CEO said, “This is a historic milestone for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper,” in a statement. “It’s incredibly exciting that we’re one step closer to realizing a US-based Bitcoin ETF.”
Grayscale is one of a number of companies who have applied for a spot bitcoin ETF. BlackRock, Fidelity, and Invesco, among others, applied for authorization to start their own bitcoin funds earlier this year.
Bitcoin is risen over 65% this year, although it is still far from its late-2021 high of $68,000.
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