The recent approval of the spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC) marks a pivotal moment in the financial world. This milestone not only signifies a major achievement for the cryptocurrency industry but also acknowledges Grayscale Investments’ significant legal victory.
Grayscale’s Determination and Legal Battle
Grayscale Investments took center stage by initiating the conversion of its Grayscale Bitcoin Trust (GBTC) into a standard Spot Bitcoin ETF. Despite initial rejection by the SEC due to concerns about market maturity and potential manipulation, Grayscale refused to back down.
Under the leadership of Chairman Gary Gensler, Grayscale Investments strategically enlisted the services of Donald B. Verrilli, who served as Solicitor under the Obama Administration. This strategic move bolstered their legal campaign and set the stage for a fierce legal battle.
Notable Legal Victory
In late August 2023, a significant legal victory was secured for Grayscale. Chief Judge Sri Srinivasan from the United States Court of Appeals ruled in favor of the company, compelling the SEC to review its denial, which was deemed “arbitrary and capricious.” Interestingly, the SEC chose not to appeal, signaling the imminent approval of Grayscale Investments’ spot Bitcoin ETF.
Internal Disagreements Within the SEC
The approval of the spot Bitcoin ETF has brought to light internal divisions within the SEC.
Commissioner Caroline A. Crenshaw issued a dissenting letter, raising concerns about the lack of oversight in the global spot markets underlying Bitcoin ETPs. She cited issues such as fraud, manipulation, and concentrated ownership. Crenshaw also questioned the Commission’s failure to address broader public interest, especially regarding the criminal use of Bitcoin.
On the other hand, Commissioner Hester Peirce celebrated the approval after a decade-long saga. She emphasized the benefits of ETPs for investors and criticized the Commission’s protracted denials. Peirce also highlighted inconsistencies in treatment compared to other ETP applications.
Collective Efforts for the Spot Bitcoin ETF
In the grand scheme of things, Grayscale Investments played a significant role in spearheading this initiative. However, other major players such as BlackRock Inc., Fidelity Investments, Bitwise, and VanEck made noteworthy contributions to the collective effort to bring the spot Bitcoin ETF to fruition.