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Breaking: Crypto Snaps to Life as Grayscale Wins Case Against SEC
The crypto market flipped green today on news that crypto fund manager Grayscale Investments has won a pivotal court case against the SEC in its quest to offer a spot Bitcoin ETF.
Grayscale currently offers a futures-backed ETF but was blocked by the SEC when it attempted to convert the product into a fund that would hold Bitcoin directly. In return Grayscale opted to sue SEC in mid-2022, arguing that it was “arbitrary and capricious” to allow a futures-based ETF and not a spot ETF.
Today a three-panel judge sided with Grayscale and ruled the block must be lifted and Grayscale’s application must be officially reviewed by the SEC.
The ruling might go down as a landmark development for crypto adoption as getting access to a fund that holds Bitcoin directly would have huge ramifications for institutional and retail investors.
Are a Flood of Bitcoin ETFs Incoming?
Grayscale’s potential spot-based ETF product is noteworthy in that it’s definitely not the only one in the works.
Traditional finance giants BlackRock, VanEck and Invesco have all applied for their own crypto ETFs but, thus far, the SEC has stymied every attempt.
The SEC might not be able to hold back the flood of Bitcoin ETFs much longer, however, as the ruling in the Grayscale case could have huge implications for the market. BlackRock, in particular, has an exceptional approval rating for its ETFs and its yet to be officially rejected by the SEC so it could be close behind Grayscale — if indeed Grayscale is approved.
Crypto proponents are particularly hopeful for spot-based Bitcoin ETFs because it represent a massive amount of demand for Bitcoin and potentially other cryptocurrencies. If traditional finance giants purchase massive amounts of Bitcoin then it will push the price of the cryptocurrency higher.
Bitcoin isn’t the only crypto that investment firms have set their sights on either. Grayscale, Purpose Investments, CoinShares International and others have Ethereum ETF products as well.
Crypto Spikes on News of Grayscale ETF
Crypto has been flat for the better part of August but news of the court’s ruling in the Grayscale case has boosted almost every major coin.
Bitcoin itself was up to $27,810, which represents a bump of approximately 7% at the time this article was published. The milestone mark of $30,000 might be in play over the next few days but it remains to be seen if the coin can maintain its momentum.
Interestingly — which the Grayscale ETF only relates directly to Bitcoin — many altcoins were up as well. Ethereum, Solana and Polygon all jumped by 5% or more on news of the Grayscale victory.
Some of the publicly-traded crypto-based companies such as Coinbase (+13%), Marathon Digital (+24%) and Microstrategy (+9%) were up even more than the coins.
On a larger scale it appears the SEC’s hard stance against cryptocurrency, led by Gary Gensler, might have to soften as it continues to lose in court. Earlier this year XRP won its battle against the SEC when a judge ruled that its token, XRP, did not constitute a security in most cases.
The SEC might not like cryptocurrency but at this point it appears the courts believe it deserves the right to exist.
