Analysis: Grayscale Proposal Must Be Revisited, What Will the SEC Do?

Author: Jake Chervinsky, Chief Policy Officer, Blockchain Association; Translation: Jinse Finance 0xJS

1. Grayscale's victory over the SEC is a huge win.

Federal Circuit courts have rarely found government agencies to act arbitrary and arbitrary in violation of the Administrative Procedure Act.

The DC Circuit just caused a huge embarrassment to the SEC.

But the ETF has yet to be approved.

2. The DC Circuit firmly rejected the SEC's contention that Grayscale's ETF proposal was not "designed to prevent fraudulent and manipulative practices."

On this ground, the SEC has spent a full decade rejecting bitcoin spot ETF proposals. This era is over.

3. But the court did not order the SEC to approve Grayscale's ETF proposal. It simply said the SEC's analysis on the issue of "fraud and manipulation" was wrong.

Now, the SEC must re-examine Grayscale's proposal, taking into account the court's ruling.

What will the SEC do?

4. One theory is that the SEC will choose another reason to reject Grayscale's proposal, forcing a longer and more expensive lawsuit.

this is possible. It’s hard to underestimate the extreme hostility towards cryptocurrencies from the SEC leadership.

Will Chairman Gensler really accept this defeat?

5. But another theory is that the SEC will view the DC Circuit decision as a (semi) graceful exit from their anti-ETF stance.

I am on this side. This is the right move.

"We disagree, but we follow the rule of law" is a convenient excuse to get out of a losing battle.

6. The SEC will also face political pressure to approve a bitcoin spot ETF.

It's not just about Grayscale. All traditional finance is ready for a Bitcoin ETF.

There have been a number of other issuers making ETF proposals this year, including BlackRock, while Larry Fink launched a heavy-hitter in Washington.

7. Chairman Gensler can also weave a face-saving narrative out of approving a bitcoin spot ETF.

The SEC has been under heavy criticism for its enforcement approach to regulating cryptocurrencies.

This is an opportunity to say "Look, we're not anti-crypto! We're open to approving appropriate products!"

8. I have no doubt that sooner or later we will get a Bitcoin spot ETF.

The only question is whether the SEC is willing to make this more painful. Believe me, if you get rejected again, there will be another lawsuit.

I strongly recommend that the SEC choose "early" (pass).

let us wait and see.