The D.C. Circuit Court of Appeals closed the books on a dispute between the U.S. Securities and Exchange Commission (SEC) and Grayscale, with a final ruling that effectively orders the agency to scrap its rejection of the asset manager's spot bitcoin ETF application.

This formal closure of the case on Monday essentially solidifies the court's initial ruling two months ago that the SEC was "arbitrary and capricious" in its decision to reject Grayscale's attempt to convert its roughly $17 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF.

The SEC chose not to appeal that ruling, making today's action a formality.

The ball now returns to the SEC's court, where the agency could choose to approve Grayscale's application or perhaps reject it on other grounds. The SEC is also in the process of making decisions on numerous other spot bitcoin ETF applications, including those from asset management giants BlackRock, Fidelity and Franklin Templeton.

"The Grayscale team looks forward to continuing to work constructively with the SEC to convert GBTC to an ETF," spokeswoman Jennifer Rosenthal said in a statement after Monday's conclusion of the case. "GBTC is operationally ready, and we intend to move as expeditiously as possible on behalf of our investors."

UPDATE (October 23, 2023, 19:07 UTC): Adds comment from a Grayscale spokeswoman.

Grayscale GBTC SEC Bitcoin ETF

Stephen Alpher

Stephen is CoinDesk's managing editor for Markets. He previously served as managing editor at Seeking Alpha. A native of suburban Washington, D.C., Stephen went to the University of Pennsylvania's Wharton School, majoring in finance. He holds BTC above CoinDesk’s disclosure threshold of $1,000.