U.S. appeal court ruling could open door to crypto ETFs

The U.S. is closer to seeing its first spot bitcoin ETF after a court ruled in favour of Grayscale Investments in its lawsuit against the Securities and Exchange Commission (SEC).

The SEC had denied the firm’s bid to convert the Grayscale Bitcoin Trust to an ETF. On Tuesday, the D.C. Circuit Court of Appeals ruled that Grayscale’s fund was similar to two bitcoin futures exchange-traded products that received regulatory approval, and that the SEC failed to explain why it approved those funds but not Grayscale’s.

“In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful,” the ruling said. “We therefore grant Grayscale’s petition for review and vacate the Commission’s order.”

Grayscale CEO Michael Sonnenshein called the ruling a “historic milestone for American investors, the bitcoin ecosystem, and all those who have been advocating for bitcoin exposure through the added protections of the ETF wrapper.”

“It’s incredibly exciting that we are one step closer to making a U.S. spot bitcoin ETF a reality,” he said in a release.

The proposed ETF would allow investors to gain exposure to the cryptocurrency without having to own the coin, which is held in custody.

Several other firms, including BlackRock and Fidelity, have applied for spot bitcoin ETFs.

In Canada, regulators approved spot cryptocurrency ETFs in 2021, leading to ETFs from several manufacturers including Purpose Investments, Evolve Funds Group, CI Global Asset Management, Fidelity and others.

The Grayscale Bitcoin Trust has US$16.2 billion in assets under management.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.