An article to understand how all parties view Grayscale's victory? SEC follow-up action prediction

Organized by: Songxue, Golden Finance

On August 29 local time, Grayscale (Grayscale) won a major victory against the US Securities and Exchange Commission in court. The Washington Circuit Court of Appeals granted Grayscale’s petition to review the SEC’s rejection of its application to convert GBTC into a spot bitcoin ETF. Hopes for spot bitcoin ETF approval are reignited.

Affected by this news, Grayscale’s Bitcoin Trust soared 17%, and the entire cryptocurrency market seems to have finally turned around. Industry insiders hold different views on Grayscale’s phased victory. Golden Finance sorts out opinions from all sides for readers.

What Grayscale Says:

**Grayscale CEO Sonnenshein: **Thanks for the Washington DC Circuit Court’s judgment in favor of Grayscale, and thanks for the support and encouragement of investors. In addition, Grayscale's legal team is actively reviewing the court's opinion.

** Grayscale Chief Legal Officer Craig Salm: ** We appreciate the opinion of the Washington, DC Circuit, which acknowledges that this case raises straightforward questions about equal treatment under the law. We are also grateful to the legal teams of Munger, Tolles and Olson, Davis Polk and Wardell. The next step is to work closely with the SEC on a plan to introduce GBTC to NYSE Arca as a spot Bitcoin ETF.

Positive opinion:

Paul Cappelli, Head of Liquidity Passive Strategies, Galaxy Digital: The court decision is a watershed moment for the space, ETFs are an underlying product, and ETFs drive trading in commodities, including gold and oil, as investors want access. If Grayscale is ultimately successful, the broader bitcoin and cryptocurrency market should react positively, with some market volatility and increased demand for bitcoin.

**Jeremy Senderowicz, Vedder Price Law Firm:**According to the court ruling, this is almost a fatal blow to the SEC's decision not to allow these products to market. The core rationale for rejecting all spot Bitcoin ETFs.

Rahsan Boykin, General Counsel at Hashflow: This is an interesting ruling, given the way the judge broke down the SEC's arguments...in my opinion, it's quite a harsh position.

Oppenheimer & Co analyst Owen Lau: This ruling has added impetus to the digital asset industry after the Ripple case-now the market is full of great optimism.

**Bloomberg Intelligence analyst James Seyffart: **Although the possibility of GBTC being able to convert to an ETF has increased, it is not 100%. The SEC cannot reject spot ETFs using the same arguments about fraud and manipulation that they have used in past rejection letters. Whether the SEC will eventually approve the listing of Bitcoin futures ETFs depends on Gary Gensler's leadership and the SEC's belief that Bitcoin ETFs are not allowed to exist.

U.S. Court of Appeals for the Federal Circuit of the District of Columbia**: ** requires the U.S. SEC to accept Grayscale’s review application for converting GBTC into an ETF, and revoke the U.S. SEC’s previous order (2021 Grayscale and NYSE Arca apply to convert GBTC into ETF, U.S. SEC denies the application in June 2022).

**Bloomberg ETF analyst James Seyffart: ** Although Grayscale's victory in the lawsuit does not mean that GBTC can be freely converted into ETFs, it takes the conversion one step closer.

**Blockchain Association Chief Policy Officer Jake Chervinsky: **Grayscale's victory over the SEC is "huge." The D.C. Circuit Court just caused a huge embarrassment to the SEC, but the ETF has yet to be approved. The DC Circuit firmly rejected the SEC's contention that Grayscale's ETF proposal was not designed to protect against fraudulent and manipulative acts and practices. The SEC has rejected Bitcoin ETF spot proposals on this ground for a full decade. That era is now over. I have no doubt we will get a spot bitcoin ETF sooner or later. The only question is whether the SEC wants to make itself more miserable. Believe me, if there is one more denial, there will be another lawsuit, and I strongly recommend that the SEC choose "ASAP".

Negative view:

**Arca Chief Investment Officer Jeff Dorman: **The world's largest digital asset will need a "significant" catalyst to break out of the range limit." He warned that it is "premature" to regard the ruling as a panacea for Bitcoin's continued rise , and emphasized that “real follow-through will only happen when BlackRock and others start to actually market Bitcoin in their filings. Dorman pointed out that most of this year has been dull for digital asset investors. benefits. "

SEC follow-up action prediction:

**SEC spokesperson: **The court’s ruling is being reviewed. The agency has 45 days to ask the full Washington DC Circuit Court to reconsider the decision. If the appeals court refuses to accept the case, the SEC will have 90 days to request the U.S. The Supreme Court hears the case.

**Arie Heijkoop, Partner, Haynes Boone LLP: **The SEC is not expected to appeal. The court explained the inadequacies of the SEC's decision with sufficient force that it is unlikely that the decision will be overturned. If the SEC remains reluctant to approve spot bitcoin [products], this decision does leave room for the SEC to review its denial of Grayscale and clarify other reasons for the denial.

Matt Hougan, chief investment officer of Bitwise Asset Management: According to the appeal decision, the SEC will then face several choices. One is to approve all or part of the 9 spot bitcoin ETF applications as soon as possible. The SEC may agree with the court ruling and issue an order allowing the exchange (NYSE Arca) where the Grayscale ETF is listed to continue listing the Grayscale fund, or to approve other funds that have applied. The second is to delay when the law allows. A third option is to present a new reason for the application’s denial and face the possibility of another lawsuit by Grayscale, the SEC can no longer use the argument that the market is not large enough to prevent manipulation, but it may present other arguments.

Bloomberg analyst Seyffart: It is uncertain whether the SEC will make a new decision in the next few weeks or months, or require Grayscale to submit a 19b-4 form (used to notify regulators of proposed rule changes) However, the SEC may find a reason that has not been used before to refuse to convert GBTC into an ETF, such as potential objections around Bitcoin custody.

IMPACT ON THE MARKET:

Greyscale’s Bitcoin Trust (GBTC): Up nearly 17% on the day in secondary trading to $20.56. Based on Grayscale's per-share holdings, the company's shares rose 7.18% to $25.09. Assets rose to $17.4 billion from $16.2 billion the previous day. GBTC's trading volume recorded the largest daily trading volume in value terms since June 21, 2022.

**CryptoSea anonymous founder Crypto Rover: **The court ruled that the SEC's decision to reject the Grayscale Bitcoin spot ETF was wrong. What's next? Probably all other bitcoin spot ETFs will be approved, the question is really when, not if. This ETF is a fully regulated spot ETF, not a synthetic version. A spot ETF means that every share issued must be backed 1:1 by actual Bitcoin. Given this requirement, I think this could be the catalyst for the start of a new bull market.