Following a US court’s approval of the first bitcoin exchange-traded fund in the country, the value of digital assets increased on Tuesday.
The decision represents a major victory for cryptocurrency investors and a defeat for the Securities and Exchange Commission, which has been attempting to control the digital asset market.
A judgement by the SEC denying Grayscale Investments authorization to introduce a bitcoin-focused ETF was overturned by a three-judge panel for the DC Court of Appeals. According to the panel, the regulator did not fully explain its decision to deny the firm’s application.
Judge Neomi Rao ruled that the Commission’s refusal of Grayscale’s request was arbitrary and capricious because the Commission failed to explain why it treated similar items differently.
A representative for the SEC stated on Tuesday that the organization was examining the court’s ruling to determine its next course of action.
On the news, major crypto tokens increased. The price of bitcoin increased by 7% to close to $28,000 in recent weeks, which has seen particularly high volatility. The biggest US cryptocurrency exchange by market cap, Coinbase (COIN), increased 15%.
The Grayscale Bitcoin Trust, or GBTC, the case’s central bitcoin fund, was up 17%.
The SEC has already approved other bitcoin investment products, according to Grayscale, who claimed that their proposal was essentially identical. The Chicago Mercantile Exchange currently has futures contracts for the two more bitcoin products from the cryptocurrency companies Teucrium and Valkyrie. The judges noted that Grayscale had provided “uncontested evidence” demonstrating the close resemblance between the underlying assets, bitcoin and bitcoin futures.
The decision makes an investment product available that investors have been asking for for years.
Traditional investors might gain exposure to bitcoin through a spot bitcoin ETF without really holding the digital commodity.
According to Grayscale CEO Michael Sonnenshein in a statement, this marks an important turning point for American investors, the Bitcoin ecosystem, and all those who have pushed for increased exposure to Bitcoin through the use of ETFs’ improved security. The fact that we are one step closer to seeing a US spot Bitcoin ETF become a reality is tremendously exciting.
Several companies have submitted applications for a spot bitcoin ETF, including Grayscale. A number of companies, including BlackRock, Fidelity, and Invesco, applied for approval to start their own bitcoin funds earlier this year.
Despite being up over 65% so far this year, bitcoin is still far from its high of over $68,000 in late 2021.
