Grayscale Secures Court Order Against SEC

Alex Dovbnya

Grayscale Investments has secured a pivotal court order from a federal appeals court

Grayscale Investments has won a court order from a federal appeals court in its pursuit to establish a Bitcoin exchange-traded fund (ETF). 

The move, which is merely a formality, comes after the US Securities and Exchange Commission (SEC) decided not to appeal the August court ruling. 

As a result of the court’s mandate, the SEC is now required to review its prior rejection of Grayscale’s bid, which aimed to transition its existing trust into a Bitcoin-based ETF. 

Court’s stance challenges SEC’s earlier position

Back in August, Judge Neomi Rao deemed the SEC’s denial “arbitrary and capricious”, highlighting the regulatory body’s inconsistency in approving other similar financial products.

The ruling came despite its concerns over the potential insufficiency of fraud detection mechanisms within a Bitcoin-oriented ETF.

Grayscale’s proposal, which was earlier shunned due to the SEC’s concerns about adequate surveillance to prevent fraud in a Bitcoin ETF, will now undergo a fresh review. 

The SEC is widely expected to approve a Bitcoin ETF in the near future. The Bitcoin price recently surpassed the $31,000 level due to the new bullish narrative. 

Grayscale’s Ethereum ETF proposal gains traction

Simultaneously, the SEC has acknowledged Grayscale’s separate initiative to convert its Grayscale Ethereum Trust (ETHE) into a spot Ethereum ETF. 

The trust, established in March 2019, currently manages assets close to $5 billion, capturing 2.5% of the total Ether in circulation. 

Michael Sonnenshein, Grayscale’s CEO, emphasized that this conversion is supposed to present an investment model more aligned with the preferences of U.S. investors.

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Alex Dovbnya