The case is being closely watched by the cryptocurrency and asset management industries, which have been trying for years to convince the SEC to approve a spot bitcoin ETF. They say it would allow investors to gain exposure to bitcoin, the world's largest cryptocurrency, without having to own it. The SEC, though, worries spot bitcoin ETFs will be vulnerable to manipulation.
Bitcoin futures ETFs track bitcoin futures that trade on the Chicago Mercantile Exchange , the chief venue for those products. The CME "surveils futures market conditions and price movements on a real time and ongoing basis in order to detect and prevent price distortions, including price distortions caused by manipulative efforts," the SEC has said.
The SEC, however, says Grayscale lacks data to determine whether the CME futures surveillance agreement could also detect potential manipulation in the spot markets.Both parties have 45 days to appeal the ruling, in which case it would either go to the U.S. Supreme Court or an en banc panel review. Grayscale's CEO has said he'sif the court rules in the SEC's favor. It is unclear if the SEC would do the same if the court sides with Grayscale.