In recent weeks, there has been a shimmer of light for cryptocurrencies and exchanges, with ‘Grayscale Investments’ recording a significant victory in its lawsuit against the United States Securities and Exchange Commission.
In October 2021, Grayscale Investments brought an application to convert its Bitcoin Trust (GBTC) into a listed Bitcoin exchange-traded fund (ETF) to the SEC. The Security and Exchange Commission denied Grayscale’s application on the basis that its request had failed to show evidence in which it “had implemented protections against market manipulation or similar wrongdoings regarding.”
The SEC’s rejection of Grayscale’s application led to the crypto asset manager filing a petition review against the commission. Almost two years later, an appeals court ruled in favor of the crypto asset manager, signifying a turn of the tide.
The appeals court stated that Grayscale Investments had shown that its proposed Bitcoin exchange-traded fund was much the same as futures-based exchange-traded products and should have been treated equally and received the same regulatory treatment.
Furthermore, the U.S. District of Columbia Court of Appeals ruled that the Securities and Exchange Commission (SEC) had erred in rejecting an application from Grayscale Investments to list a spot on the bitcoin exchange-traded fund (ETF).
What is a Bitcoin ETF?
A Bitcoin ETF is an exchange-traded fund that invests in cryptocurrency assets, similar to mutual funds, except that the ETFs are sold on the open stock market. Investors buy shares in the ETF and can trade them.
A Bitcoin ETF is the same as any other exchange-traded fund; it allows investors to gain price exposure to one of the largest cryptocurrencies without owning any of it.
What the Win means for the crypto community and SEC
Following the announcement of the Grayscale ruling, Bitcoin rose by 7.1%, which inevitably lifted the broader crypto market. The lawsuit has been closely monitored by investors and the crypto community, hoping to find regulatory clarification on Bitcoin ETFs.
The Grayscale ruling confirmed that it's just a matter of time before Bitcoin ETF becomes a reality in the U.S. and increases the likelihood of the SEC approving other Bitcoin ETF applications such as Fidelity, BlackRock, VanEck, WisdomTree, and others.
Similarly, the ruling has provided some relief for crypto enthusiasts and a turning point against the unproclaimed war against the SEC Chairperson ‘Gary Gensler’. The chairman’s insistence on cracking down on the crypto market has led to several enforcements and costly lawsuits.
Under the leadership of Gensler, the SEC has filed dozens of crypto-related enforcement actions. Gensler’s campaign against the crypto industry has come at the hands of several costly lawsuits and defeats.
In 2020, the SEC accused Ripple (XRP) of breaching security laws by selling XRP without first being registered as a security. The lawsuit backfired on the commission, as their standpoint that all cryptocurrencies are securities was denied.
Ripple secured a partial victory when a U.S. federal court ruled that the sale of XRP tokens on exchanges did not constitute investment contracts. The SEC has sought approval to appeal the judgment, even though it's a minor loss in the unsettled lawsuit.
The most recent loss suffered by Grayscale Investment has strengthened the position of crypto exchanges against the SEC. Both matters are currently unsettled against the SEC; however, the minor judgments signify a weakness in the commission’s analysis.
Crypto exchanges and investments are now less likely to settle in a lawsuit against the commission. Whereas before, the thought of a costly lawsuit against the agency forced many crypto exchanges to settle.
In the coming months, Gary Gensler’s seat as chairperson of the SEC will be under the spotlight. The commission faces two stern lawsuits against Binance, the world’s largest crypto exchange, and Coinbase, the largest exchange focus in the U.S.
Binance has already dealt a blow to the SEC, with the commission failing to secure a restraining order to freeze the exchange assets in the U.S. Both crypto exchanges won’t shy away from a tussle with the SEC in light of its recent defeats.
The battle with Binance could be the decisive blow to Gensler’s reign at the SEC and could bring about some relief for the crypto community. However, a win for the SEC against one of the biggest crypto exchanges will bring a vulnerable crypto market to its knees.
Why Bitcoin ETFs are great news for crypto casinos?
There has always been speculation about the safety and risk of using cryptocurrencies as a payment method. Despite the widespread adoption amongst online casinos and companies like PayPal, the volatility and lack of clear regulations surrounding cryptocurrencies remain discouraging for investors.
The thought of owning a Bitcoin wallet and entrusting your funds with a crypto exchange platform is still growing in society. However, the thought of a spot-on Bitcoin ETF eliminates the threat of owning a coin.
Bitcoin ETFs are the inevitable future of cryptocurrencies and will provide investors with a well-known investment structure. It’s just a matter of time until the SEC approves Bitcoin ETFs; this move will functionally see the largest cryptocurrency’s arrival at Wall Street.
A move to Wallet Street would presumably be a game changer for crypto exchanges and platforms. A whole new market of new investors and positive exposure will lead to growth in the crypto market.
New investors and a higher trading price of the crypto market will undoubtedly open doors for many crypto casinos.