Grayscale Wins Lawsuit to Launch Spot Bitcoin ETF

The firm is one step closer to launching the first U.S. spot cryptocurrency ETF.

Finance Reporter
Reviewed by: Lisa Barr
Edited by: Ron Day

Grayscale Investments won a lawsuit against the SEC that may allow it to convert the Grayscale Bitcoin Trust (GBTC) to an ETF, a watershed ruling that brings investors a step closer to the highly anticipated spot bitcoin exchange-traded fund.   

The U.S. Court of Appeals for the District of Columbia overturned the SEC’s decision to block Grayscale’s effort to convert its bitcoin trust into an ETF. In its ruling issued Tuesday, the court argued that the agency was unjustified in denying the trust’s conversion and ruled that the SEC must review Grayscale’s application.   

The legal victory is a huge step forward for firms that want to offer a spot bitcoin ETF to investors. While the SEC has approved ETFs that track futures contracts for bitcoin, a so-called spotcoin would allow investors to invest in physically backed bitcoin without buying the token itself. 

“Spot BTC ETFs are coming to the U.S,” Tim Bevan, CEO of ETC Group, a European cryptocurrency investment firm, wrote in an email. The next step is probably approval of a slate of spot bitcoin ETF applications in one swoop, he wrote, adding that final approval will come after “the inevitable SEC appeal.” 

Grayscale first sued the SEC in June 2022 after the regulatory body blocked its bid to turn its bitcoin trust into an ETF. A slew of firms, including BlackRock Inc., Fidelity Investments, and Bitwise Asset Management are seeking to launch a spot bitcoin ETF as the regulator faces increasing pressure to approve different bitcoin investment products.   

SEC’s ‘Arbitrary’ Decision on Spot Bitcoin ETF 

The judges agreed with Grayscale’s argument that the SEC should approve its trust conversion because the agency already approved bitcoin futures ETFs. Judge Neomi Rao wrote in the opinion that the SEC’s denial of Grayscale’s proposed conversion was “arbitrary and capricious” and that the SEC “failed to explain its different treatment of similar products.” 

“This is a monumental step forward for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper,” Grayscale said in a statement. The firm added that it is “reviewing the details outlined in the Court’s opinion.” 

The SEC has not yet responded to a request for comment. 

Bitwise Asset Management Chief Investment Officer Matt Hougan said in an emailed statement the ruling is a “win for American investors.”  

“A spot bitcoin ETF will lower costs and improve access for investors, while providing them with important regulatory protections,” he said in an email.    

Bitcoin jumped more than 5% on the news, while shares of Coinbase Global Inc., a custodian for multiple spot bitcoin applications, jumped 14%.   

However, the ruling does not mean the firm is automatically launching a spot bitcoin product. The SEC has 45 days to appeal the ruling. 


Contact Lucy Brewster at [email protected] 

Lucy Brewster is a finance reporter at covering asset managers, emerging technologies, and regulation. She hosts webinars and appears on Exchange Traded Fridays,’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.