Grayscale Paves the Path: Securing Approval for Bitcoin ETF
The recent endorsement of the Bitcoin ETF by the SEC marks a momentous occasion in the world of finance. This not only signifies a great achievement for the cryptocurrency industry but also recognizes the significant legal victory of Grayscale Investments.
Grayscale Investments took center stage by taking the initiative to convert its Grayscale Bitcoin Trust into a standard Spot Bitcoin ETF. Despite facing initial rejection from the SEC due to concerns about market maturity and potential manipulation, Grayscale stood its ground.
Under the leadership of Chairman Gary Gensler, Grayscale Investments strategically sought the assistance of Donald B. Verrilli, who had previously served as Solicitor under the Obama Administration. This strategic move strengthened their legal campaign and set the stage for a fierce legal battle.
In late August 2023, a significant legal victory was achieved by 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 decided not to appeal, indicating the imminent approval of Grayscale Investments’ spot Bitcoin ETF.
The approval of the Bitcoin ETF has shed light on internal divisions within the SEC. Commissioner Caroline A. Crenshaw expressed her dissent through a letter, raising concerns about the lack of oversight in the global spot markets that underlie Bitcoin ETPs. She brought up issues such as fraud, manipulation, and concentrated ownership. Crenshaw also questioned the Commission’s failure to address wider public interest, particularly regarding the criminal use of Bitcoin.
On the other hand, Commissioner Hester Peirce celebrated the approval after a decade-long struggle. She emphasized the benefits of ETPs for investors and criticized the Commission’s prolonged denials. Peirce also highlighted inconsistencies in treatment compared to other ETP applications.
While Grayscale Investments played a significant role in spearheading this initiative, other major players such as BlackRock Inc., Fidelity Investments, Bitwise, and VanEck also made noteworthy contributions to the collective effort to bring the Bitcoin ETF to fruition.