Crypto asset manager Grayscale Investments recently achieved a significant victory in its ongoing battle with the United States Securities and Exchange Commission (SEC). The U.S. Court of Appeals Circuit Judge Neomi Rao granted Grayscale’s petition for review and vacated the SEC’s order to deny the listing application for its Grayscale Bitcoin Trust (GBTC) as a Bitcoin exchange-traded fund (ETF).
Previously, Judge Rao had criticized the SEC for failing to provide any explanation for its decision to reject Grayscale’s application. This victory was initially met with enthusiasm from the crypto community. However, many were cautious about the limitations of the court’s decision. Gabriel Shapiro, the general counsel for Delphi Labs, expressed skepticism, stating that the SEC would likely continue to pursue its agenda regardless of court decisions. Similarly, Austin Campbell, the managing partner of Zero Knowledge Consulting, highlighted the expensive and burdensome nature of fighting back against the SEC for many companies.
While Grayscale celebrated its win, the SEC postponed its decisions on six applications for spot Bitcoin ETFs. The regulator extended the review period for applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, Valkyrie, and the Wise Origin Bitcoin Trust proposed by Fidelity. The SEC now has an additional 45 days to consider the proposed rule changes, giving it until October to approve, deny, or delay a decision on these ETFs.
In the United Kingdom, a new regulation called the Travel Rule for crypto assets has come into effect. This rule requires crypto asset businesses in the UK to withhold certain crypto transfers if they are received from overseas entities or jurisdictions that have not implemented the Travel Rule themselves. Service providers are now required to make a “risk-based assessment” before making crypto assets available to beneficiaries. This rule also applies to outbound payments from UK residents.
Meanwhile, in the United States, the SEC has made its first claim against an NFT offering for engaging in unregistered securities transactions. The SEC accused Impact Theory, a media and entertainment company based in Los Angeles, of raising nearly $30 million through the sale of NFTs called Founder’s Keys. According to the SEC, the company marketed these NFTs as an investment opportunity in the business, making them subject to registration requirements.
In a surprising move, a Chinese court declared that virtual assets are considered legal property. The court published a report analyzing the criminal law attributes of virtual assets and concluded that they should be classified as property protected by law. This ruling contradicts China’s broader stance on digital assets, as the country has imposed a ban on all foreign digital assets. However, the report argued that virtual assets held by individuals should still be considered legal and protected.
In conclusion, Grayscale’s victory against the SEC is seen as a positive development for the crypto industry. However, the SEC’s delay in approving spot Bitcoin ETFs and its scrutiny of NFT offerings underscore the regulatory challenges facing the market. The implementation of the Travel Rule in the UK and the recognition of virtual assets as legal property by a Chinese court also highlight the evolving regulatory landscape for cryptocurrencies worldwide.