A big update in the crypto world occurred over the weekend, as the US Securities and Exchange Commission did not appeal a decision made back in August by a federal court that it did not have grounds to reject Greyscale Investment’s application for a spot BTC ETF (exchange – traded fund). Greyscale had applied to convert its $16.7 billion Bitcoin Trust – which is the world’s largest crypto fund – into an ETF, therefore making it easier for elements of the public to invest directly in the digital token. It would also facilitate their investment due to the fact that ETFs are considered a cheap, safe and well-understood regulatory instrument, which goes against the SEC’s initial decision to decline Greyscale’s application. 

In concrete terms, this does not necessarily mean that the application will be approved. The rumour that it had been approved spread on Saturday, driving bitcoin’s (BTC) price temporarily up by almost 4% to above $28,000 over the weekend, after falling back down on Monday. Greyscale Investment’s application for a spot BTC ETF is simply back in play: however, the SEC will likely not have ground to reject it against after failing to appeal the federal court’s decision over the weekend.  

The SEC had initially opposed the conversion to ETF by indicating the bitcoin is prone to fraud and market manipulation, unlike, for example, bitcoin futures, which the SEC has approved of. However, the appeals ruling led by Judge Neomi Rao found the SEC’s reasoning to be “arbitrary”, as the regulator essentially was not capable of demonstrating why spot BTC ETFs are more dangerous for American investors than futures-based ETFs. This is an important decision, as we eagerly wait to see whether Greyscale Investment’s application for a spot BTC ETF will be the first to be approved, and of more to come.