The first question to ask is, what is a Bitcoin ETF?
ETF stands for Exchange Traded Funds – An ETF tracks the value of Bitcoin and trades on traditional markets rather than the crypto exchanges. The advantage for investors is they are allowed to invest in the cryptocurrency without using a crypto-based exchange. This adds leverage to the price, but is also attractive to older users who prefer mainstream financial institutions.
The recent Lawsuit involving Grayscale vs. SEC Lawsuit was based around the ETF, and here is what we found at Digital Wager Wire.
The Securities and Exchange Commission (SEC) is the governing authority of the cryptocurrency. Grayscale did in fact, win the Lawsuit.
Who is Grayscale? Grayscale is known as the world’s largest crypto asset manager based in Stamford, Connecticut and they are responsible for the management of over $50 billion in assets.
1 Grayscale’s Argument
The Grayscale argument behind the litigation brought against the SEC was that the agency had previously agreed on surveillance agreements that prevent fraud in Bitcoin’s futures-based ETFs.
Therefore, the same argument should be satisfactory for Grayscale’s spot ETF, given both spot and futures relate to the Bitcoin price.
2 The Door Is Now Open!
Grayscale’s litigation against the SEC is an important one for the industry on several levels.
Being the first often opens the door means that other more trusted high-profile asset managers like Blackrock, Fidelity and Invesco who have the same filings pending will now be confident in their own ETFs. They also see the advantages of having a spot ETF and the SEC have stated they will rule on those by 2024 at the latest.
3 The Ruling
The District of Columbia Court of Appeals in Washington last August ruled that the SEC was wrong to reject Grayscale’s proposed bitcoin ETF. The grounds they refused the request on, were that SEC arbitrarily denied Grayscale’s application believing they never gave an explanation as to why the two arrangements had differences.
The appeals court is expected to issue a mandate, on their decision and how it would be executed with instructions for the SEC to revisit Grayscale’s original application.
4 The SEC Will Not Be Appealing the Decision
Interestingly, the SEC has stated they will not be appealing the decision of the court. Here at Digital Wager Wire, we believe that’s a good sign for the industry that the SEC has accepted the ruling in good faith.
In this brand-new world of crypto, these issues are bound to crop up with so many unchartered waters and territories to cross. For a governing body to accept such a ruling, suggests they have the right ideals and are looking to aid industry growth rather than potentially win one court hearing.
5 Consequences
As John Wick likes to say, “consequences.” And indeed, there is bound to be a fallout within the industry given large and trusted brands were awaiting the ruling. With no appeal to delay things, those large financial corporations will see the ETFs as the perfect foothold in the industry for their investors, many of whom have never ventured into the cryptocurrency digital age. Through their proxies, their users will be able to trust the process far easier than jumping into the digital world, which some know little about and struggle to trust.
Conclusion
In this cryptocurrency feature at Digital Wager Wire – we investigated what is a Bitcoin ETF. Once we established that it stood for Exchange Traded Funds and its function was to follow the price of Bitcoin while trading on the traditional financial markets, we found that Grayscale proved their argument that their ETF spot fitted the remit of SEC regulations and should have been approved.
With many other well-touted and traditional financial institutions following the progress of the case closely, and the SEC not appealing the verdict, the door has been widened for more interaction with the mainstream investment community.
If those corporations do bring their own ETF spots on board, their investors who have played the traditional markets will now be able to enjoy the crypto world through what they perceive as a trusted proxy.
At Digital Wager Wire, we concluded this new move as a positive one as it will bring growth, new footfall, and a wider, more accepted level of trust to the industry over time.
