A federal appeals court ruled that the Securities and Exchange Commission had wrongfully denied Grayscale Investments’ application to create a cryptocurrency fund that sells on stock exchanges.
Michael Sonnenshein, chief executive of Grayscale, in April. On Tuesday, a federal appeals court ruled that the S.E.C. was wrong in denying Grayscale’s application to create a Bitcoin exchange traded fund.Credit...Matthew Busch/Bloomberg
Cryptocurrency prices jumped on Tuesday after the industry’s largest fund manager scored a legal victory in its long-running attempt to make it easier for investors to put Bitcoin in their portfolios.
The U.S. Court of Appeals for the D.C. Circuit ruled that the Securities and Exchange Commission had improperly denied an application from the asset manager, Grayscale Investments, to create a Bitcoin exchange traded fund, calling the rejection “arbitrary and capricious.”
Grayscale is seeking to create the fund to give investors exposure to the cryptocurrency via traditional brokers and markets rather than digital asset exchanges.
The S.E.C. has already approved funds that bet on Bitcoin futures, or price fluctuations in the cryptocurrency, but it has denied numerous requests for an E.T.F. holding Bitcoin itself, arguing that the markets are subject to fraud and manipulation.