Court Ruling Advances Prospects of Grayscale Spot Bitcoin ETF

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A federal appeals court overturned the SEC’s decision to block Grayscale’s spot Bitcoin ETF, bringing the fund closer to launch.

According to Source, The ruling by a three-judge panel in Washington reversed the SEC’s stance that a spot Bitcoin ETF was not consistent with the Securities Exchange Act.

It represents a major victory for Grayscale after years of the SEC repeatedly rejecting physical Bitcoin ETFs or delaying decisions. The prospect of an approved spot ETF could significantly expand crypto access.

But the SEC could still appeal or find other justification to block it. For now the ruling sustains mounting pressure on the regulator to greenlight a spot Bitcoin fund.

Overturning the SEC

According to the court opinion, the SEC exceeded its authority and was “arbitrary and capricious” in denying the Grayscale Bitcoin Trust converting to a spot ETF.

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The judges took issue with the SEC’s stance that the spot market underlying Grayscale’s proposed ETF was resistant to manipulation. This reasoning formed the basis for its rejection.

By overturning this view, the court decision struck a blow to one of the SEC’s prime justifications for continually blocking spot crypto ETFs over fraud and manipulation concerns.

It remains to be seen whether the SEC accepts the ruling or attempts to find alternative grounds to maintain its rejection. But the opinion adds to building momentum for approval.

Expanding Crypto Access

A spot Bitcoin ETF could significantly widen access to crypto exposure among retail and institutional investors.

By tracking Bitcoin’s actual price rather than futures, it offers direct exposure suited to longer-term investments. And the ETF format provides convenience and confidence for traditional investors wary of crypto itself.

Companies from Fidelity to ARK Invest have lined up spot Bitcoin ETF applications as the SEC delays keep any from being approved. Some assert the regulator is overstepping its authority amid clear investor appetite.

For now Grayscale is one step closer thanks to the court win, though the SEC still has potential avenues to block it. The ruling sustains pressure on the regulator to open the door for a spot Bitcoin ETF.

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