A strong court win for the crypto spot-market ETF fight isn’t the end of the battle, because the next move belongs to the SEC, though it’s now significantly weakened.
A slap-down from federal courts means the Securities and Exchange Commission must now rethink bitcoin spot ETFs, though its old objections won’t work and the clock is ticking.The crypto industry’s campaign to set up exchange-traded funds has now pushed the U.S. Securities and Exchange Commission against a wall with Grayscale Investments’, but it’s still up to the agency to decide whether to retreat or keep fighting.
“‘Arbitrary and capricious’ are not words that Gary Gensler should want to hear from federal courts, but that’s what this unanimous panel of judges called his agency’s judgment,” said Pat Daugherty, a former SEC lawyer who now represents crypto clients with Foley & Lardner. “The SEC failed to explain why it could approve ETFs based on bitcoin futures but not an ETF based on bitcoin. Since like cases must be treated alike in America, the SEC lost.
One former Republican SEC commissioner told CoinDesk – on the condition he not be named – that he wouldn't be surprised if the agency works to come up with another rejection. Two of the judges in the decision – Chief Judge Sri Srinivasan and Senior Circuit Judge Harry Edwards – were Democratic appointees, from the same party as Gensler, so their view can’t be characterized as a conservative backlash against the administration.
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