The US appeals court overturned the SEC's decision to reject Grayscale's application for Bitcoin spot ETF listing.

Grayscale Investments LLC, a digital currency asset management company, won a key legal lawsuit in promoting the launch of Bitcoin spot ETFs, further pushing the cryptocurrency industry towards ordinary investors.

Last June, the US Securities and Exchange Commission (SEC) rejected Grayscale's application to convert its Bitcoin trust, Grayscale Bitcoin Trust (GBTC), into a Bitcoin spot ETF, citing the lack of sufficient supervision of Bitcoin based ETFs to prevent fraud. Subsequently, Grayscale filed an appeal against the SEC, accusing it of discriminating against the company's products due to the SEC's approval of similar Bitcoin futures ETFs.

On Tuesday, the Federal Circuit Court of Appeals for the District of Columbia in Washington released a joint ruling by three judges, overturning the SEC's decision last year. The appellate court stated that the substantive evidence provided by Grayscale can prove that its products are similar to the Bitcoin futures ETFs previously approved by the SEC. The underlying assets of the two products are closely related, and Grayscale's supervisory sharing protocol is "identical" to that of CME, which launched Bitcoin futures ETFs. Judge Neomi Rao wrote, "The decision to reject Grayscale's application is arbitrary and capricious, as the SEC failed to explain its different handling of similar products.

The latest ruling marks a watershed for Bitcoin, where spot ETFs have become more likely to emerge, injecting tremendous momentum into Grayscale's efforts over the years. This is also a stern condemnation of SEC Chairman Gary Gensler's attempt to suppress the industry.

Supporters say that ETFs based on Bitcoin spot prices will lead to a large influx of retail cash, potentially attracting billions of dollars of investment from ordinary investors. The victory of Grayscale may have the broadest impact. Some of the largest and most well-known companies in the financial sector have recently submitted applications to the SEC to launch Bitcoin ETFs. Grayscale described this as a "milestone step for American investors". Roxanna Islam, Vice Director of Research at VettaFi, said, "For all potential spot Bitcoin ETFs, Grayscale's victory is a huge victory, not just Grayscale.

The SEC stated that it is reviewing this ruling. So far, the SEC only allows futures based encrypted ETFs because it says they are more secure. The agency can still challenge the ruling by requiring all judges of the Circuit Court of Appeals or the United States Supreme Court to review the decision.

Investors welcomed this news. Grayscale Bitcoin Trust rose as high as 21% at one point, while Bitcoin rose as high as 8.3%. During the trading session, it surged close to $2000, reaching $28000 per coin.

Oppenheimer&Co analyst Owen Lau said in a telephone interview that this ruling has added momentum to the digital asset industry. There is a huge sense of optimism in the market now, "he said. People expect the first spot Bitcoin ETF to be approved in the short term. I think the market pricing is too fast, now it's too fast.

Kaiko research analyst Riyad Carey said, "This ruling has led people to speculate that a wave of spot Bitcoin ETFs may soon be approved. It is not yet clear how this will have an impact, but given that trading volume is approaching multi-year lows, it may trigger a whirlwind in the crypto market, which may help increase trading volume as we enter the autumn.

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