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Federal Court Ruling Sparks Potential for First U.S. Spot Bitcoin ETF Approval

The possibility of a spot bitcoin exchange-traded fund (ETF) in the U.S. has emerged stronger following a federal court ruling that mandates the U.S. Securities and Exchange Commission (SEC) to review its rejection of Grayscale Investments’ attempt to convert the Grayscale Bitcoin Trust (GBTC) into an ETF, media reports said.

This legal victory has the potential to open the door for a spot bitcoin ETF in the U.S., which proponents argue would allow a broader segment of the public to invest in bitcoin without the complexity of purchasing it directly or dealing with issues like custodial problems. While the SEC has previously denied all such ETF applications, new applicants are now hoping for a different outcome.

Circuit Judge Neomi Rao, writing for the D.C. Circuit Court of Appeals, stated that federal agencies must treat similar cases consistently.

“The Securities and Exchange Commission recently approved the trading of two bitcoin futures funds on national exchanges but denied approval of Grayscale’s bitcoin fund. Petitioning for review of the Commission’s denial order, Grayscale maintains its proposed bitcoin exchange-traded product is materially similar to the bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca. We agree,” she said.

The SEC’s disparate treatment of similar products was not adequately explained, rendering the denial of Grayscale’s proposal “arbitrary and capricious,” she added.

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