Grayscale’s cryptocurrency funds hold $21 billion in assets and GBTC remains the largest of the firm’s trusts. The fund was launched in 2013 and since 2017, the company has been trying to convert it into a spot exchange-traded fund, but the SEC has been adamant, rejecting all of the company’s applications. Grayscale Investments sued the regulator in 2022.

The appeals court ruled on August 29 that the decision to deny GBTC’s conversion to a spot ETF should be overturned, and the SEC must reconsider the application. Bitcoin immediately reacted to the verdict with a noticeable increase in price, rising by almost $1,500 to $27,400.

“The denial of Grayscale’s motion was arbitrary and capricious because the SEC failed to explain its different treatment of similar products. We therefore grant Grayscale’s motion and vacate the regulator’s order,” the court said in a statement.

The SEC now has 45 days to request a hearing before the full appeals court, with three judges. Only after this new court convenes or the deadline expires will the verdict be deemed to have taken effect.

The regulator has more than a dozen applications piling up for spot bitcoin ETFs.

By Linda

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