The Securities and Exchange Commission has reportedly chosen not to contest a court decision that ordered the regulatory agency to review its rejection of Grayscale's application to turn its Bitcoin (CRYPTO: BTC) trust into a more accessible exchange-traded fund (ETF).

This move could potentially pave the way for the debut of the first Bitcoin ETF in the country, Reuters reported Friday. 

This development will be a topic of interest at Benzinga's Future of Digital Assets conference on Nov. 14.

In August, the D.C. Circuit Court of Appeals declared the SEC's disapproval of Grayscale Investment's bid to transition the Grayscale Bitcoin Trust (OTC:GBTC) to an ETF "arbitrary and capricious."

The court emphasized that federal institutions must consistently handle similar cases.

Circuit Judge Neomi Rao said in August: "The Securities and Exchange Commission recently approved the trading of two Bitcoin futures funds on national exchanges but denied approval of Grayscale’s Bitcoin fund.”

A Grayscale spokeswoman did not immediately comment on Friday's decision, Reuters said. 

The future actions of the SEC concerning Grayscale's proposal remain uncertain.

Although the SEC retains the right to reject the application on different grounds, Grayscale might counter such decisions in court.

Also Read: Bitcoin To Overtake Gold, Silver? Prominent Crypto Analyst Makes Bold Claim

Grayscale, which initiated its request to transition its closed-end fund into an ETF in October 2021, manages the world's most substantial cryptocurrency fund.

GBTC, which has been trading at a price below its Bitcoin assets since February 2021, saw this discount widen to nearly 50% at one stage; it has now moderated to around 17%.

Grayscale has consistently expressed the belief that transitioning GBTC to an ETF would bridge the valuation gap between the fund's price and its underlying Bitcoin assets, thanks to the ETFs' creation-redemption mechanism that adjusts share supply based on demand.

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