Grayscale’s Legal Win Shakes Up SEC’s Stance on Bitcoin ETF Approval

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Grayscale, a major player in the crypto world, has achieved a significant victory against the U.S. Securities and Exchange Commission (SEC). This victory has caught the attention of experts, who are now discussing what might happen next and how the SEC could respond.

Despite the significant win for Grayscale, the DC Circuit’s judgment didn’t outrightly approve the Grayscale ETF proposal. The court dismissed the SEC’s notion that the proposal was inadequate in preventing fraudulent and manipulative activities. 

However, the court didn’t demand immediate approval either. This situation prompts the SEC to reevaluate and reexamine Grayscale’s proposal in light of the court’s judgment.

SEC’s Future Response and Prospects for Grayscale ETF

1/ Grayscale's victory over the SEC is *massive.*

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

— Jake Chervinsky (@jchervinsky) August 29, 2023

Amid the aftermath of Grayscale’s legal victory, the crypto community now stands at a crossroads, considering the potential move of the SEC on approval of Bitcoin ETF. Meanwhile, a legal expert and market observer, Jake Chervinsky, shares his views on what the SEC might do in response to the court’s decision.

Chervinsky presents two plausible theories. One possibility is that the SEC might pivot to an alternative ground to reject Grayscale’s proposal, potentially igniting another cycle of lengthy legal battles. 

Another outlook suggests that the SEC could gracefully embrace the DC Circuit’s decision as a strategic retreat from their anti-ETF stance.

In addition to the legal aspects, political pressure enters the equation. Beyond Grayscale, the traditional financial sector yearns for a Bitcoin ETF, a sentiment echoed by numerous issuers, including industry giant BlackRock. 

SEC’s Dilemma and Future Choices

After rejecting spot Bitcoin ETF proposals for years, the U.S. Securities and Exchange Commission (SEC) is at a corner that requires consideration over the future. Many believe that SEC Chair Gensler might seize the opportunity to reposition the agency’s image as anti-ETF.

The outcome of this deliberation has the potential to not only reshape the regulatory landscape but also send ripples of influence across global financial markets.