- The United States Court of Appeals has ruled in favor of Grayscale in its legal battle against the United States Securities and Exchange Commission (SEC).
- According to the data, the share price of GBTC started at $17.66 at the opening of the day and rose to $20.56, an increase of nearly 17% compared to the previous day. Additionally, the fund experienced its busiest day in over a year with 19 million GBTC shares changing hands.
- Currently, GBTC operates as a closed-end fund and experienced a discount of 48.89% to its net asset value (NAV) in December 2022. This discount has been reduced to approximately 18% following the court’s decision in favor of Grayscale.
Following Grayscale’s victory in the spot Bitcoin
Increased Interest in Grayscale’s GBTC
On August 29, the United States Court of Appeals ruled in favor of Grayscale in its legal battle against the United States Securities and Exchange Commission (SEC). Following this, the trading volume of Grayscale’s GBTC shares significantly increased, reaching the highest level in two years.
According to the data, the share price of GBTC started at $17.66 at the opening of the day and rose to $20.56, an increase of nearly 17% compared to the previous day. Additionally, the fund experienced its busiest day in over a year with 19 million GBTC shares changing hands. This increase in volume was recorded as the highest in over two years.
These figures are not surprising considering that Grayscale’s victory presented a bullish outlook for the fund. Furthermore, as Grayscale’s GBTC is one step closer to being converted into a Spot Bitcoin ETF, many investors may want to acquire the fund at a discounted price.
Currently, GBTC operates as a closed-end fund and experienced a discount of 48.89% to its net asset value (NAV) in December 2022. This discount has been reduced to approximately 18% following the court’s decision in favor of Grayscale. However, there are still those who believe that if Grayscale’s ETF application is approved, this gap could further narrow.
A Major Victory for the Crypto Community
Grayscale had filed a lawsuit against the SEC, which rejected its application to convert the GBTC fund into a Spot Bitcoin ETF. Grayscale claimed that the SEC acted arbitrarily and capriciously because it did not provide the same regulatory treatment to the Teucrium Bitcoin Futures Fund and Valkyrie XBTO Bitcoin Futures Fund.
The fund argued that it deserved the same treatment as a Bitcoin futures fund because the prices of Spot and Futures Bitcoin ETFs were “99.9%” correlated, thus carrying the same risk of fraud and manipulation.
The court accepted Grayscale’s argument and determined that the SEC did not provide sufficient reasons to reject Grayscale’s application while approving Bitcoin futures funds.
With this decision, the SEC’s reason for not approving Spot Bitcoin is no longer valid, as the Commission cannot reject applications solely because the Spot Bitcoin market does not have a regulated major market.
The court also concluded that since both funds (spot and futures) were found to be similar, the surveillance sharing agreements of these exchanges with the Chicago Mercantile Exchange (CME) should be sufficient to deter manipulation in the spot or futures market.
It remains to be seen what action the SEC will take regarding the Court of Appeals decision, but the likelihood of approving pending spot Bitcoin ETF applications has increased if the Commission cannot find another reason to reject these proposals.
