Greyscale Secures a Win in Its Appeal Against the SEC

• Greyscale believes the ruling is a win for the entire crypto industry.
• The appeals court noted that the SEC lacked sufficient reason to reject Greyscale’s application.
• Both Greyscale and the SEC have 45 days to appeal the court’s ruling.

The United States could be finally set to have its first spot bitcoin exchange-traded fund after crypto asset manager Grayscale Investments secured a victory in its case against the U.S. Securities and Exchange Commission (SEC). An appeals court ordered the SEC to review its rejection of Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into an ETF.

The SEC initially rejected the application, citing that the product was not “designed to prevent fraudulent and manipulative acts and practices.” However, Grayscale sued and eventually secured a favorable ruling.


The court noted that the SEC’s rejection of Greyscale’s application lacked a coherent reason. The court opinion stated that “the Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” adding that “in the absence of a coherent explanation, this unlike regulatory treatment of like products is Unlawful.”

The ruling explained that Grayscale provided sufficient arguments that its proposed ETF was similar to the recently approved Teucrium and Valkyrie bitcoin futures products and called for similar treatment from the SEC

According to the ruling,

Grayscale has demonstrated that its proposed bitcoin ETP is materially similar, across relevant regulatory factors, to the approved bitcoin futures ETPs. First, the underlying assets—bitcoin and bitcoin futures—are closely correlated. And second, the surveillance sharing agreements with the CME are identical and should have the same likelihood of detecting fraudulent or manipulative conduct in the market for bitcoin and bitcoin futures.

THIS JUST IN: The D.C. Circuit ruled 3-0 in favor of Grayscale and $GBTC. This is a monumental step forward for all who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper. Read the decision: pic.twitter.com/BNZABvM7tw

— Grayscale (@Grayscale) August 29, 2023

Circuit Judge Neomi Rao also stated that federal agencies are required to “treat like cases alike.” She wrote in the D.C. Circuit Court of Appeals opinion:

The Securities and Exchange Commission recently approved the trading of two bitcoin futures funds on national exchanges but denied approval of Grayscale’s bitcoin fund. Petitioning for review of the Commission’s denial order, Grayscale maintains 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. We agree.

The ruling is a turning point for the cryptocurrency industry. The SEC has rejected a number of applications for spot Bitcoin ETFs, which give investors access to Bitcoin without actually owning any of the cryptocurrency. The US regulator often cites market manipulation as a core concern in its rejection of applications for a spot Bitcoin ETF

Reacting to its successful appeal, a Greyscale spokesperson said the ruling “is a monumental step forward for American investors, the Bitcoin eco, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper.”

🚨 JUST IN 🚨

The D.C. Circuit ruled in favor of @Grayscale in our lawsuit challenging the SEC’s decision to deny $GBTC’s conversion to an ETF!

Thank you to everyone who has been on this journey with us, especially our investors. We are grateful for your support and…

— Sonnenshein (@Sonnenshein) August 29, 2023

The spokesperson further noted that the Greyscale team and legal advisors are “actively reviewing the details outlined in the Court’s opinion and will be pursuing next steps with the SEC.”

Interestingly, several cryptocurrencies reacted positively to Greyscale’s appeal. Bitcoin climbed 5% to $27,300 in less than an hour after the court’s ruling was made public. Other coins like XRP and Ethereum rose more than 4% during that time.

Both the SEC and Greyscale have 45 days to appeal Tuesday’s ruling. In the case of an appeal, the case could be moved to the U.S. Supreme Court or reviewed by an en banc panel.