Melanion Capital Talks: Grayscale’s Victory Over the SEC: A Turning Point for Spot Bitcoin ETFs?

The cryptocurrency world was set abuzz recently with the news of a groundbreaking SEC decision that could potentially reshape the landscape for Bitcoin ETFs. In an insightful interview with Hubert De Vauplane, Partner at Kramer Levin and President at Legal Blockchain & Cryptos Association and Morgane Reicher, Lawyer at Kramer Levin , we dissected the intricacies of this decision, aiming to shed light on what it means for investors and the broader crypto market.

For years, the SEC had been notorious for rejecting applications for Bitcoin ETFs, citing concerns over market manipulation and other issues. This decision, however, questioned the SEC’s methods and reasoning for consistently denying these ETFs.

The Key Points

A key aspect of the decision revolved around the SEC’s inability to sufficiently justify its rejections based on the unregulated nature of Bitcoin. According to the SEC, Bitcoin didn’t meet the criteria of a regulated asset, primarily due to its perceived vulnerability to market manipulation. Ultimately, this decision called upon the SEC to provide more coherent justifications for its rejections.

A Path Riddled with Hurdles

This decision is a new episode in a very long history. The concept of a Bitcoin ETF has been on the table since 2017, with multiple rejections over the years, each accompanied by different arguments. The SEC established a checklist of points that needed addressing before considering any ETF application, creating a sort of hurdle race for applicants.

What Makes This Decision Different?

What sets this decision apart is the involvement of the courts. A judicial decision against the SEC forces them to reassess their reasoning and provide more substantial justifications for their rejections. While it doesn’t guarantee immediate approval for all ETFs, it does challenge the SEC to refine its arguments.

Future Outlook for Grayscale and a Bitcoin Spot ETF

What happens to Grayscale, the company that sponsored the ETF application, and the potential transformation of its product into an ETF? The SEC will now reexamine the application, potentially leading to either a more robust justification for rejection or an approval. The pressure is on the SEC to provide a comprehensive response.

The European Perspective

In Europe, the situation regarding ETFs is different. The regulatory framework, known as UCITS, allows for investment in funds within regulated wrappers such as life insurance or retirement savings plans.

However, the rules imposed are strict, including asset typology and diversification requirements: the ETF must invest in regulated and diversified assets. Thus, it becomes evident that a Bitcoin Spot ETF could not fit into this framework, posing a real challenge.

Melanion Capital embraced this challenge by launching the Melanion Bitcoin Equities UCITS ETF, the world’s first UCITS ETF focusing on Bitcoin, providing exposure to it through equities, which are regulated assets.

In conclusion, the recent SEC decision marks a significant turning point in the quest for Bitcoin ETFs. While it doesn’t guarantee immediate approval, it challenges the SEC to provide clearer reasoning for its decisions. Investors and enthusiasts eagerly await further developments in this ever-evolving story that promises to shape the future of cryptocurrency investments.

Stay tuned for more updates on this eventful journey.


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.

The information relayed in this article must be considered and analyzed in light of all the risks identified in the fund’s pre-contractual documentation, which you can find via the following link.

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