A federal judge has ruled that the U.S. Securities and Exchange Commission (SEC) must reconsider cryptocurrency asset manager Grayscale Investments’ application to launch the first Bitcoin (BTC) exchange-traded fund (ETF) in America.
The court ruling is viewed as a blow to the SEC, which has engaged in a wider crackdown on the cryptocurrency sector.
Crypto enthusiasts have long sought approval of a Bitcoin ETF, which they see as a catalyst for broader investor adoption of digital coins and tokens.
Grayscale sued the SEC after the agency denied its application to convert its current Bitcoin trust into an ETF that directly holds physical Bitcoin.
The SEC, which is tasked with regulating Wall Street, has already approved ETFs tied to Bitcoin futures contracts.
The judge in the case ruled that the SEC’s denial of Grayscale’s proposal was “arbitrary and capricious” because the regulator failed to explain its different treatment of similar investment products.
Grayscale has said that a Bitcoin ETF could help it unlock $5.7 billion U.S. in value and called the court ruling a “monumental step forward for American investors.”
Other financial management firms, including BlackRock (BLK) and Invesco (IVZ), have recently renewed their applications to launch a Bitcoin ETF.
Bitcoin’s price rallied more than 5% on news of the court ruling, and is now up 65% on the year and trading at $27,400 U.S.
