The excitement lit up with joy as news broke about the District of Columbia Circuit Court of Appeals’ ruling on Grayscale Investments’ spot Bitcoin ETF application.
A collective cheer reverberated through the crypto community as the United States Securities and Exchange Commission (SEC) had its rejection of the application overturned.
However, while this decision brought hope, it’s important to understand that its impact might not be as all-encompassing as many had initially hoped.
The Crypto Community’s Cheers
In what felt like a victory for the crypto enthusiasts, the court’s decision to compel the SEC to consider Grayscale’s Bitcoin spot ETF application was met with enthusiastic applause.
The mood was electric, and notable figures in the crypto world expressed their exhilaration.
Cinneamhain Ventures founder, Adam Cochran, couldn’t hide his excitement, characterizing the decision as a “slaughterfest of the SEC arguments.”
Meanwhile, influencer Miles Deutscher echoed the sentiment, declaring, “This changes everything. Time to pay attention again.”
The full decision is a slaughterfest of the SEC arguments, and requires a full review of Grayscale's application.
SEC options from here on out are:
1. Delay decision and come up with new fake reason
2. Concede and approve
3. Request en banc appeal of the case. pic.twitter.com/4xqOdtOF0D
— Adam Cochran (adamscochran.eth) (@adamscochran) August 29, 2023
A Closer Look at the Decision
While the initial celebration was infectious, a more tempered evaluation of the ruling gradually took hold.
It became evident that the scope of the decision was limited, and the SEC still retained options for its subsequent actions.
Grayscale, in response, issued a statement through its chief legal officer, Craig Salm.
Salm expressed appreciation for the D.C. Circuit’s recognition that the case revolved around a straightforward question concerning equal treatment under the law.
This shift towards a more measured perspective gained momentum as analysts began to contemplate the SEC’s potential moves.
Gary Gensler and his team found themselves at a crossroads.
The focus shifted from the immediate win to how this situation could be turned into a political victory.
There were questions about whether Gensler would gracefully accept the outcome or leverage the dissenting voices of the three judges to push forward.
Crypto lawyer John Deaton posed a thought-provoking query:
“Will Gensler graciously accept defeat or talk about how these 3 judges got it wrong?”
Elation and Cheers Abound
As the court’s decision rippled across the digital landscape, crypto enthusiasts found themselves riding a wave of elation.
The compelling nature of the ruling, which required the SEC to reconsider Grayscale’s ETF application, triggered jubilant cheers and spirited discussions.
One couldn’t help but feel the energy radiating from the community, with voices like Adam Cochran, the founder of Cinneamhain Ventures, exclaiming, “The SEC arguments were completely trounced in there!”
Meanwhile, Miles Deutscher, a well-known influencer, chimed in, “This is a game-changer. Time to dive back in!”
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
Exploring Potential Scenarios
As the dust settled, various potential scenarios emerged.
Jake Chervinsky, the chief policy officer of the Blockchain Association, acknowledged the possibility that the SEC might choose the path of acceptance.
He described this strategy as a “face-saving narrative” and deemed it the right move after what he termed “a huge embarrassment” for the SEC.
Yet, not everyone shared this optimism.
Gabriel Shapiro, general counsel at Delphi Labs, sounded a cautionary note.
He highlighted the SEC’s tendency to deflect responsibility in the face of defeat, pursuing alternative strategies with little regard for judicial outcomes.
This uncertainty bred skepticism within the community.
The High Stakes of Legal Battles
Amid the optimism and skepticism, the sobering reality of legal battles within the crypto landscape became evident.
The term “shenanigans” was used to describe the SEC’s tactics, drawing attention to the potential cost of such maneuvers.
For smaller companies, mounting a legal defense could prove astronomically expensive, potentially leading to victory at the cost of bankruptcy.
On the other hand, larger financial entities risked having their broader business operations compromised as the SEC’s influence reached far beyond the courtroom.
Austin Campbell, managing partner at Zero Knowledge Consulting, referred to these actions as “gangster behavior,” emphasizing the disproportionate power the SEC could wield.
Everyone, welcome "Big Money" to the table.
For better, or worse.https://t.co/CGjF4aiIOZ
— Jeremy Hogan (@attorneyjeremy1) August 29, 2023
The Arrival of “Big Money”
In the midst of the unfolding drama, crypto lawyer Jeremy Hogan offered a thought-provoking perspective.
He welcomed “Big Money” to the table, cautioning the community to be mindful of what they had wished for.
While the Grayscale win appeared to be a triumph, Hogan’s words highlighted the potential complexities that the influx of institutional players could introduce.
The jubilation following the reversal of the SEC’s rejection of Grayscale Investments’ Bitcoin spot ETF application was undeniable.
The crypto community reveled in this legal victory, seeing it as a step forward in the journey toward greater acceptance and recognition.
However, the celebrations were tinged with an awareness of the complexities and uncertainties that still lay ahead.
As the crypto world navigates these uncharted waters, the only certainty is that the journey is far from over.