The crypto world applauded the court decision with Grayscale. The United States Securities and Exchange Commission (SEC) lost its fight to investment firm Grayscale. At issue was whether Bitcoin ETFs were legal. And the District Court of Columbia said yes. We explain what this is all about, why it opens up many possibilities for Bitcoin, and how this news has had a positive impact on the price of the cryptocurrency.

What are Bitcoin ETFs? The dispute revolved around this financial mechanism. Bitcoin ETFs are exchange-traded funds linked to Bitcoin. They are basically funds that allow you to invest in this cryptocurrency, but do not need to buy it directly.

The SEC argued that this could lead to market manipulation. Advocates point out that not all investors interested in Bitcoin are familiar with cryptocurrencies and wallets and prefer to invest through funds or regular brokers.

Origin. In June 2022, the SEC denied Grayscale’s ability to convert its Bitcoin program into a Bitcoin ETF. This firm’s claim was that they would apply the same safeguards against manipulation that other ETFs have, but the US regulator did not see this clearly and rejected the offer.

Grayscale denounced this decision in court, and now, after a year of debate and responses, they’ve got its reasoning out of court.

There is no big difference between investing in bitcoin and owning bitcoin. The jury decided that Grayscale’s proposal to invest in Bitcoin futures was “almost similar” to holding bitcoin directly. The reason they think is because the current price of the cryptocurrency is “closely related” to its futures. And this relationship is what justifies that it is difficult to manipulate the Bitcoin price with futures.

Regarding the SEC, the judges say their decision was “arbitrary” and that they “never explained why betting on Bitcoin futures rather than Bitcoin itself could affect their ability to detect manipulations.”

All the major mutual funds were on alert. The reason this decision is so relevant is because it doesn’t just affect Grayscale. Nearly all major US funds were waiting. BlackRock, Fidelity, WisdomTree, VanEck, Invesco, Ark Invest or 21 Shares have already requested permission to offer Bitcoin ETFs.

They will be able to do so from now on unless the SEC decides to refer the matter to the US Supreme Court, but it has yet to announce that it will.

And the Bitcoin price is having its best day in months. The news was received very positively by Bitcoin investors. The cryptocurrency surged 7% in one day, its best result in months, and once again comfortably surpassed $27,000.

We’ll have to see how it behaves next year, but recent legal victories in the crypto world are bringing quite a bit of calm to the industry.

Image | André François McKenzie

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