In a decisive development, the US Securities and Exchange Commission (SEC) has decided not to appeal a recent court decision that found it unfair to deny Grayscale Investments' application to create a spot bitcoin exchange-traded fund (ETF).

The District of Columbia Court of Appeals in Washington ruled in August that the SEC was wrong to reject Grayscale's proposed Bitcoin ETF. The SEC's decision not to appeal the ruling could potentially expedite review of Grayscale's application.

The Spot Bitcoin ETF will offer investors access to the world's largest cryptocurrency by market cap, without needing to own it directly. However, the SEC has consistently rejected all spot Bitcoin ETF applications, including Grayscale's, on the grounds that the applicants did not have adequate safeguards to protect investors from market manipulation.

In response, Grayscale argued that the SEC's approval of certain custody agreements to prevent fraud in Bitcoin futures-based ETFs should be sufficient for its spot ETFs.

Grayscale's legal battle hinged on the SEC's inconsistent approach to spot and forward Bitcoin ETFs; but both carry similar risks and are priced on the same spot markets. The argument is built on the premise that both spot and futures funds are tied to the price of Bitcoin. The appeals court also arbitrarily rejected Grayscale's application, stating that the SEC did not explain the material difference between the two regulations.

The news was well received among the crypto community.

The SEC's failure to appeal the court decision now clears the way for other asset managers, including BlackRock, Fidelity and Invesco, to file similar filings with the SEC for a spot Bitcoin ETF. The SEC is expected to decide on these applications by next year at the latest.