Grayscale has a 70% chance of winning the case against SEC: Analyst

  • Bloomberg analyst Elliot Stein gave his insight into Grayscale’s lawsuit against the SEC.
  • The analyst considers a ruling in the case likely in the first half of 2023.

Elliot Stein, a senior process analyst for Bloomberg, recently appeared on an episode of Unchained Podcast hosted by Laura Shin.

The analyst gave his insight into Grayscale’s lawsuit against the Securities and Exchange Commission over the latter’s rejection of a mock Bitcoin ETF application.

The SEC’s conduct may violate U.S. federal law

Stein revealed that at the final hearing on March 7, Grayscale argued that there was an inconsistency in the standards the SEC applied, as they approved applications for a Bitcoin futures ETF but consistently rejected applications for a spot Bitcoin ETF.

Grayscale argues that since the underlying assets for both products are the same and derive their price from Bitcoin, the Wall Street regulator should be treating the products the same way, but that is not the case.

Grayscale has asserted that the regulator’s behavior is arbitrary and erratic and, as such, violates U.S. federal law.

The SEC responded by stating that it had applied the same standards, but that the products were in fact different.

According to the SEC, the Bitcoin futures market is regulated by the CFTC, making it different from the spot BTC ETF, which they say has no regulatory oversight.

Prior to the hearing, Elliot Stein believed that the SEC had an edge in the lawsuit and that their chances of winning far outweighed the GBTC issuer’s, as courts tend to defer to federal agencies because they are experts in their respective fields.

However, after hearing the final arguments, the Bloomberg analyst gave Grayscale a 70% chance of winning the case.

The detailed analysis

In the event that Grayscale wins the lawsuit, approval for its spot Bitcoin ETF may not come immediately. According to Stein, the filing will most likely be returned to the SEC for further review.

The analyst stated that the language in the court ruling will determine the fate of Grayscale’s mock Bitcoin ETF.

If the ruling conflicts with Grayscale, it is possible that, in the spirit of ensuring consistent standards, permission for Bitcoin futures ETFs may be revoked.

Speaking of SEC’s other high-profile legal battle in the crypto space, the Bloomberg analyst stated that their rulings will play an important role in shaping crypto regulatory policy in the United States.

Some of these cases include SEC v. Ripple, which revolves around XRP’s alleged status as a security, and the SEC’s lawsuit against former Coinbase executive Ishan Wahi, where the regulator banned nine of the tokens involved in the case. designated as securities.

Finally, Stein also added that the case against Terraform Labs will affect the regulator’s treatment of stablecoins.

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