SEC’s Verdicts on Spot Bitcoin ETF Applications!
According to recent information, the U.S. Securities and Exchange Commission (SEC) has unveiled its decisions regarding the spot Bitcoin exchange-traded fund (ETF) applications filed by WisdomTree, Valkyrie, and Invesco Galaxy earlier this year. The SEC had previously begun reviewing applications from a mix of cryptocurrency-focused and traditional financial firms, including Wise Origin (Fidelity), BlackRock, Fidelity, and Invesco Galaxy, last month. Earlier this week, the D.C. Circuit Court found some of the regulator’s arguments for denying Grayscale’s bid to convert the Grayscale Bitcoin Trust into an ETF seemed “arbitrary and capricious.”
SEC Unveils Critical Decisions on Spot Bitcoin ETFs
Recent information according to Reuters reveals that the U.S. Securities and Exchange Commission (SEC) has deferred its decision-making process on the spot Bitcoin exchange-traded fund (ETF) applications submitted by WisdomTree, Valkyrie, and Invesco Galaxy earlier this year.
Last month, the SEC commenced its examination of applications from both crypto-centric and traditional financial firms, such as Wise Origin (Fidelity), BlackRock, Fidelity, and Invesco Galaxy. The applicants are hopeful that launching the first spot Bitcoin ETF, which they argue would enable retail investors to participate more extensively in the Bitcoin arena, could shield investors from challenges like setting up wallets or purchasing Bitcoin directly.
In today’s rulings, the SEC refrains from providing a definitive decision; instead, it extends the existing comment periods and allows for more public feedback concerning the applications.
Earlier this week, the D.C. Circuit Court found some of the regulator’s arguments for denying Grayscale’s bid to convert the Grayscale Bitcoin Trust into an ETF seemed “arbitrary and capricious.” Grayscale contended that the SEC lacked a substantial basis to reject the proposal to transform the Grayscale Bitcoin Trust into an ETF.
According to the Court, the SEC’s actions appear inconsistent!
In a statement penned on behalf of the United Court, Judge Neomi Rao noted that the denial of the application contradicted the approval of Bitcoin futures-based ETFs and failed to explain the “99.9% correlation” between the spot and futures market prices of the underlying Bitcoin market. The Judge emphasized that Grayscale’s proposed ETF won on the claim that it was “essentially similar” to futures-based ETFs. The Judge stated:
“First, the underlying assets—Bitcoin and Bitcoin futures—are closely correlated. Second, the surveillance-sharing agreements with the CME are identical, and the likelihood of detecting fraudulent or manipulative trading should be the same in the Bitcoin or Bitcoin futures markets.”
The SEC has used similar arguments that it employed in rejecting Grayscale’s proposal to reject other ETF applications. The appellate court has summoned the regulator to revisit the application for review.
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