A Win for Crypto?! Grayscale vs. SEC

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🌊Wave Of Positivity
🧋Wednesday Bubbles
👌Selected Meme of The Day
📰Bite-Sized News

WAVE OF POSITIVITY

A wave of positivity has swept the market. Once again, the SEC loses a battle against crypto. Starting with XRP, now Grayscale.

Grayscale won a lawsuit against the SEC. What's important here? And what does it mean?

On August 29, 2023, the District Court of Columbia issued a decision on the lawsuit filed by Grayscale Investments against the U.S. Securities and Exchange Commission (SEC). According to it, the regulator is obliged to reconsider the company's application for converting the GBTC Bitcoin trust fund into an ETF.

Let's see what the "Trust vs ETF" comparison entails:

A Trust (like GBTC) is generally more actively managed and might not be open to all kinds of investors.
An ETF, on the other hand, is passively managed, meaning it usually follows an index and doesn't require active decision-making for its investments. It's also open to new investors, making it more liquid and less prone to market volatility.

Okay, but why did the company file a lawsuit against the SEC in the first place? Let's take a look at the timeline that ended up in what we've got today.

In 2013, Grayscale Investments introduced a financial product called GBTC (GBTC is a type of investment fund that allows people to invest in Bitcoin without having to buy or store it themselves).
In May 2015, this product (GBTC) became publicly available for investment (This means that anyone could buy shares in GBTC through financial markets).
In 2017, Grayscale Investments tried to upgrade GBTC to an Exchange-Traded Fund (ETF). However, the SEC saw issues with this, so Grayscale Investments withdrew their application.
In 2020, GBTC was officially registered with the SEC.
In October 2021, the company tried again to convert GBTC into an ETF. Unfortunately, the SEC rejected this application too.
Frustrated with the SEC's decisions, Grayscale Investments decided to appeal. They formally asked the SEC to reconsider its rejection but were unsuccessful.
Having no other option, Grayscale Investments decided to file a lawsuit against the SEC.
The SEC finally responded to Grayscale's appeal by denying it only In June 2022. This was a formal refusal from the regulatory body to allow the conversion of GBTC into an ETF.
Despite this setback, Grayscale Investments announced they would continue their legal fight against the SEC. At this point, due to a downturn in the cryptocurrency market, known as "crypto winter," the value of GBTC shares was trading at a discount. Grayscale believed this situation might have been avoided if GBTC had been allowed to convert to an ETF and issue new shares.
The court's decision doesn't mean immediate approval for converting GBTC into a spot Bitcoin-ETF. Instead, the court has mandated that the SEC must take another look at Grayscale's application for conversion.

The SEC stated the following:

"We are studying the court's decision to contemplate our next steps."

That is, officially, the commission has not yet evaluated the verdict.

If approval occurs, this moment will positively affect the consideration of applications for the registration of spot Bitcoin ETFs from other companies.

As you can see, there are quite a lot of positive moments for crypto.

It gives the impression that crypto essentially doesn't need a fund, doesn't need to wait for a stable economy, halving, and so on.

A few victories over the SEC, some regulation, a couple of ETFs, and the bull market could start. Why not? Crypto is an independent and fully-fledged asset.

But one can also look at the situation from another perspective...

Another Viewpoint

Initially, the SEC stated that it rejected the application because the firm did not add a built-in mechanism for protection against market manipulation and similar violations.

It's possible that just yesterday, a typical market manipulation had taken place.

For example: 30,000 Bitcoin were sent to exchanges just before the announcement of Grayscale's victory over the SEC — according to Santiment data.

Whales possibly knew about the results of the legal proceedings between Grayscale and the SEC, as the day before the news was published, Bitcoin-filled wallets accumulated a total of $388.3 million in Bitcoin.

Thus, if anyone has made a significant profit recently, it's unlikely to be a retail user. Someone's gain = someone else's loss.

TL;DR: Grayscale Investments has won a lawsuit against the SEC, requiring the regulator to reconsider their application to convert the GBTC Bitcoin trust into an ETF. This decision has the potential to pave the way for easier access and trading of cryptocurrency for investors, offering the benefits of increased liquidity and reduced market volatility through an ETF structure. However, some concerns have been raised about potential market manipulation and insider trading based on significant Bitcoin movements prior to the court's decision.

WEDNESDAY BUBBLES

Look at the green, lush fields of crypto!

When Bitcoin rebounded to the $28,000 price level, it positively affected the prices of many other tokens, SUI, however, is having a hard time; their approach for incentivized SUI usage is not bad, but also not super useful.

What else can we say? Grayscale's efforts have blessed the market with optimism, and it's obvious. Ironically enough, Optimism's OP is not in the green, while the market seems to be having a fairly good time.