[NEW] Grayscale wins lawsuit against SEC, court requests review of spot Bitcoin ETF

On the 23rd, the US Federal Court of Appeals finalized the ruling handed down in August this year in a lawsuit filed by Grayscale, a major cryptocurrency management company, against the SEC (US Securities and Exchange Commission). This means that Grayscale's victory is confirmed.

Grayscale had filed a lawsuit against the SEC, dissatisfied with the SEC's rejection of its Bitcoin spot ETF application. With the ruling finalized, the SEC will revoke the application and promptly review it.

In August this year, the court ruled that the SEC was wrong to reject Grayscale's proposed Bitcoin spot ETF without explaining the reasons. In response, the SEC was expected to appeal, but no movement had occurred by the deadline of the 13th of this month.

The finalization of the ruling in the lawsuit, which had attracted attention from the cryptocurrency industry, had a positive effect on the market. Bitcoin (BTC) rose by more than 10% on the 24th as approval of BlackRock's Bitcoin spot ETF application was approaching, and Grayscale's victory was also one of the factors.

Davis Polk, the law firm representing Grayscale, said in a letter to the SEC that "the best use of [the SEC's] resources at this time is to agree to approve the ETF product, and we hope that this will happen."

A Bitcoin spot ETF would give retail and institutional investors exposure without having to own Bitcoin. The SEC has previously rejected applications for Bitcoin spot ETFs, citing a lack of evidence of sufficient investor protection, including the risk of market manipulation.

However, a Bitcoin futures ETF was approved under a market surveillance agreement with the Chicago Mercantile Exchange, where Bitcoin futures are traded. Grayscale argues that both products will be traded based on the cost of Bitcoin, and that risk aversion can be achieved with the same settings for its spot ETF.

In light of this background, the appeals court ruled that the SEC arbitrarily rejected Grayscale's application, citing no explanation at all for why the arrangements for futures ETFs and spot ETFs are significantly different, leading to this ruling.

The SEC has been tightening its grip on cryptocurrency-related companies this year, but has increasingly been dismissing claims in high-profile lawsuits.

On the 20th, the SEC asked the court to dismiss charges against Ripple CEO Bradley Garlinghouse and former CEO and current Chairman Chris Larsen. The SEC said it would continue to pursue Ripple, but it has effectively withdrawn from the trial.

The SEC filed a lawsuit against Ripple over the securities nature of the cryptocurrency XRP, but in a July ruling, it ruled that while direct sales to institutional investors may have violated federal securities laws, indirect sales to retail investors did not.

Reference:Ruling
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