The first bitcoin exchange-traded fund can now be launched after cryptocurrency fund manager Grayscale defeated the Securities and Exchange Commission in a significant legal battle on Tuesday.
When the securities regulator turned down Grayscale’s request to convert its GBTC bitcoin fund into an ETF last year, the company filed a lawsuit against the SEC.
According to Grayscale’s proposal at the time, bitcoin would be used as the ETF’s backing rather than bitcoin futures.
The company’s application was denied by the SEC due to difficulties with investor safeguards and other factors.
The District of Columbia Court of Appeals, however, sided with Grayscale, dealing another setback to the SEC’s efforts to control cryptocurrencies.
On Tuesday, bitcoin increased 8%.
ETFs are a well-liked tool for gaining exposure to specific assets without directly purchasing a commodity or a stock in a company. ETFs can be bought and sold just like conventional equities, except they follow a specific index, industry, or commodity.
Due to the fact that bitcoin technology cannot advance as quickly as stock trading technologies, Grayscale had suggested that a bitcoin ETF would be safer for investors.
“This is 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,” said Michael Sonnenshein, CEO of Grayscale, in a prepared statement.
Due to Grayscale’s victory, other fund managers will probably quickly create their own bitcoin or cryptocurrency ETFs. BlackRock and Fidelity have both previously shown interest in making similar products.
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