The court’s decision that the SEC has to consider Grayscale’s Bitcoin spot ETF application is good news for crypto but maybe not as impactful as some hoped.
The crypto community received the decision it had been hoping for when the District of Columbia Circuit Court of Appeals ruled on Grayscale Investments’ Bitcoin spot ETF application. The United States Securities and Exchange Commission (SEC) rejection of the application was overturned.
The decision was “a slaughterfest of the SEC arguments,” Cinneamhain Ventures founder Adam Cochran said on X (formerly Twitter). “This changes everything. Time to pay attention again,” influencer Miles Deutscher chimed in.
The initial enthusiasm was tempered by the understanding that the decision was limited in its scope and the SEC has options for its next steps. Grayscale released a statement in which chief legal officer Craig Salm said:
“We appreciate that the D.C. Circuit’s opinion acknowledged that this case presented a straight-forward question about equal treatment under the law.”
This more sober evaluation gained traction as analysts considered the SEC’s resourcefulness further.
“Gary Gensler and team are discussing how this can [be] made into a political win. [...] Will Gensler graciously accept defeat or talk about how these 3 judges got it wrong?” crypto lawyer John Deaton asked.
Related: BTC price jumps to 2-week highs on Grayscale vs. SEC Bitcoin ETF win
Blockchain Association chief policy officer Jake Chervinsky acknowledged the possibility that the SEC would accept defeat, calling that strategy “a face-saving narrative” and “the right move” after “a huge embarrassment.”
1/ Grayscale's victory over the SEC is *massive.*
— Jake Chervinsky (@jchervinsky) August 29, 2023
It's very rare for a federal circuit court to find that an agency has violated the APA by acting arbitrarily and capriciously.
The DC Circuit just delivered a huge embarrassment for the SEC.
But the ETF isn't approved yet
Others were less optimistic. “So far, every time they lose in court they just shamelessly say the judge got it wrong and pursue more shenanigans,” Delphi Labs general counsel Gabriel Shapiro said.
if a court finds that the government acted arbitrarily and capriciously it should have to pay the other side's legal fees -- if not, there's no consequence for bad government behavior.
— Palley (@stephendpalley) August 29, 2023
Shenanigans can be costly. “For many companies, fighting back is incredibly expensive (you will win, but you’ll be bankrupt when you do) or you’re a financial conglomerate where the SEC can fuck up the rest of your business in the meantime. Gangster behavior,” Zero Knowledge Consulting managing partner Austin Campbell said.
Live view of Garbitrary Gensler's office reading the court order that absolutely demolishes the SEC's efforts to defraud retail investors: pic.twitter.com/TfU1l5CLeV
— Austin Campbell (@CampbellJAustin) August 29, 2023
Crypto lawyer Jeremy Hogan reminded the community to beware of what it prays for. “Everyone, welcome ‘Big Money’ to the table. For better, or worse,” he said of the Grayscale win.
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