Grayscale Investments may convert its Bitcoin Trust product into an exchange-traded fund after a federal appeals court ordered the SEC to vacate its rejection.
Grayscale Investments could soon convert its Bitcoin Trust product into an exchange-traded fund after a federal appeals court ordered the Securities and Exchange Commission to vacate its rejection of the product Tuesday.
D.C. Circuit Court of Appeals Judge Neomi Rao wrote in an opinion that the SEC’s decision to approve two bitcoin futures funds, but to deny applications for a bitcoin spot ETF, was “arbitrary and capricious” and in violation of federal administrative law. “It is a fundamental principal of administrative law that agencies must treat like cases alike,” Rao wrote in her opinion, adding that the court agreed with Grayscale that “its proposed bitcoin exchange-traded product is materially similar to the bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca.”
The decision comes as a number of institutions, including BlackRock BLK, +0.42%, VankEck WisdomTree and Fidelity have all applied to sponsor spot bitcoin ETFs. Grayscale’s Bitcoin Trust GBTC trades at a discount to bitcoin spot prices, though analysts expect to shrink significantly if it is transformed into an exchange-traded product. GBTC shares jumped 16% following the decision, compared to a 5% gain in bitcoin prices early Tuesday.
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