Digital asset manager Grayscale is involved in a legal battle against the US Securities and Exchange Commission (SEC). The company is seeking approval to turn its most important and popular product, Grayscale Bitcoin Trust (GBTC), into an Exchange Traded Fund (ETF). The regulator refused, resulting in today’s event.
Reminder: Oral arguments in our lawsuit challenge the SEC’s decision to deny our application to amend $GBTC to the point #Bitcoin The ETF is scheduled for the morning of March 7.
Exact times may vary, but we can start as early as 10:00am ET.https://t.co/iZnluMgIIc— Grayscale (@Grayscale) March 6, 2023
The digital asset manager filed a lawsuit against the Commission. Today, both sides filed oral arguments. According to some experts, the company won a victory from the regulator, which led to a surge in the GBTC premium. This product returns to levels last seen in 2022 when Bitcoin was above $30,000.
Grayscale Versus SEC, Round One
Bloomberg Intelligence James Seyffart comments on arguments and potential outcomes for Digital asset managers. The judge’s reaction to the SEC attorney’s argument surprised the expert.
Seyffart expects two judges, Democrats, and likely anti-crypto, to side with the Commission while Republican judges will side with Grayscale. Apparently, all three judges were critical of the SEC’s arguments.
The legal representative of the regulator made several mistakes in his argument by using ambiguous legal language. The judge questioned this legal language, the Attorney General of the SEC which referenced the difference between futures and spot market regulations and how the Bitcoin market was “deceived” for the court’s “dissatisfaction.”
Seyffart believes that this line of argumentation from the SEC, one admits that the market spot Bitcoin “deceived,” can cancel the regulator. Experts and many others have argued that there is no legal reason to reject BTC spot ETFs.
Senior ETF Analyst for Bloomberg Intelligence, Eric Balchunas, added here are why the opening argument is positive for asset management companies:
Judges are now creating a second team in the SEC with a q variation of this main point: how can you argue that the manipulation in the spot will not affect the future, so the mutual agreement that is in the future is meaningless, which is the whole point. do not agree point etf.
Today, the judge’s position ‘inted in the favorable outcome for Grayscale and many companies looking to launch Bitcoin ETF in the United States. However, there is a long road ahead that is full of complications. Seyffart said:
I should add. Even if the judge gives Grayscale a win and vacates the SEC’s denial (which seems clear now)… There’s still a big “If” on how the judge handles it… The SEC could then theoretically deny it again for various reasons.
Experts believe that Grayscale can win over three judges and gain the upper hand. The market agreed with this perception as the GBTC premium rose for the first time in a while.