Crypto Roundup: Greyscale’s Big Day In Court, Why Bitcoin Matters Abroad
Stop the presses! We interrupt this regularly scheduled broadcast to bring you some big friggin news. 🎙️📰
We’ve been covering a lot of legal news regarding crypto lately, but this might be the biggest yet.
I’m talking about Greyscale’s win in court against the Securities and Exchange Commission (SEC).
We’ll get to the details in just a second. Just know today’s edition of Crypto Roundup will be a little different.
We normally cover anywhere from four to six developments in the crypto world in bit-sized morsels for you each week. But today, we will dispense with the usual order of business to devote enough time and space to doing the matter justice.
So, in today’s edition, we will cover just two items. As I said, the first will be the Greyscale news and what it means for the rest of us. And finally, I want to give you some food for thought that speaks to the promise of cryptocurrency for those who live beyond our borders. ✈️🧳
Let’s get to it!
Greyscale’s Big Day In Court 👨⚖️⚖️
The Bitcoin ETF dream might just be around the corner.
Grayscale has emerged victorious against the SEC, potentially paving the way for the much-anticipated spot Bitcoin ETFs.
In a rare move, the D.C. Circuit of Appeals sided with Grayscale, challenging the SEC’s previous decision to deny their application to convert the Grayscale Bitcoin Trust into a spot-price ETF.
If you’re out of the loop, here’s the lowdown… For years, Grayscale’s Bitcoin Trust, known by its snazzy ticker GBTC, was long the only game in town for investors wanting exposure to Bitcoin without the hassle of buying and storing the actual cryptocurrency.
Instead of owning the actual cryptocurrency, investors own shares of the trust, which holds a significant amount of Bitcoin (similar to a physical gold trust). The value of the trust’s shares is (largely) tied to the current market price of Bitcoin, but it’s worth noting that GBTC often trades at a premium to the actual price of Bitcoin.
But Grayscale had bigger dreams. They wanted to convert GBTC into a spot-price ETF, which would essentially be traded on traditional stock exchanges with the Bitcoin held by a brokerage.
Why all the fuss? As we’ve highlighted before, a spot Bitcoin ETF could be a game-changer, opening the floodgates for mainstream institutional adoption (and prices to shoot to the moon, potentially). 🚀📈
Now, Grayscale was not the first to file for a spot price Bitcoin ETF. Several firms have attempted this over the years, but the SEC Chairman Gary Gensler & Co. has consistently denied these applications. The action has picked up recently, with everyone from Blackrock to Fidelity throwing their hat in the ring (which we’ve covered in depth).
The Big Picture 🔍
The SEC’s objections have mainly revolved around concerns about market manipulation and lack of oversight. But this time, the court wasn’t having any of it. They found the SEC’s reasoning a tad inconsistent, especially since they’d given the thumbs up to a futures-based Bitcoin ETF by ProShares in 2021.
“The commission failed to adequately explain why it approved the listing of two Bitcoin futures ETPs but not Grayscale’s proposed Bitcoin ETP,” the court said. (ETP = exchange-traded product.)
Many firms that have filed for a Bitcoin spot ETF have addressed these concerns and even altered their applications to play nice. So now, the SEC is left scrambling. As of this writing, they’ve officially delayed ruling on the applications for seven Bitcoin ETFs (including Blackrock).
Bottom line, it’s looking like the SEC eventually won’t have a leg to stand on. In a chat with TechCrunch, Grayscale’s legal head was all smiles, stating that a Bitcoin spot ETF approval is now more a question of “when” rather than “if.”
Eat your heart out, Gary Gensler.
The Land of Tango, Soccer, Evita… and Bitcoin?💃🪙
Mark Twain is one of the most quoted people in history — so much so that he’s often misattributed for saying words he likely never uttered.
Here’s one of my favorite Twain-isms:
“Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.”
Why do I bring this up? Let’s take a brief visit to Argentina.
A guy named Javier Milei recently clinched a surprise win in a primary election. Representing the “La Libertad Avanza” party, Milei has been a vocal critic of Argentina’s central bank.
He’s also a bit of a character, he’s also a staunch Bitcoin advocate, and he has a decent shot at winning the whole enchilada.
But before you write him off as some quack, I want to encourage you to think about something…
Argentina was once a rival to European economies but has struggled with cycles of high inflation since the 1970s. Currently, annual inflation rates are hovering above 100%.
Milei’s campaign has advocated for a “return of money to its private sector origins.”
America: Land of “Exorbitant Privilege”
As this article from Coindesk points out, our perspective on cryptocurrency as Americans might not align with how the rest of the world sees it.
Bitcoin has been a boon for holders in Argentina and Turkey, countries plagued by financial instability. In these nations, Bitcoin has acted as a hedge, preserving purchasing power amidst political and economic turmoil.
The article refers to the U.S.’s “exorbitant privilege,” which refers to the incredible benefits we reap from the dollar’s status as the global reserve currency.
Because international trade is settled in dollars, other countries need to purchase safe dollar-denominated assets like U.S. treasuries. This allows us to benefit from low interest rates compared to the rest of the world.
In other words, we can pretty much borrow as much money as we want for relatively cheap. And if other countries don’t like it, well, that’s just tough, isn’t it?
Why This Matters
Here’s more from the article:
Over the past five years, many Bitcoin holders outside the U.S. have seen greater gains due to their local currencies’ depreciation against the dollar. This is particularly evident in Argentina and Turkey, where Bitcoin has not only been a store of value but also a beacon of financial hope amidst challenging economic landscapes.
The takeaway here is that people in inflation-ravaged countries like Argentina and Turkey have been able to preserve their purchasing power through political and economic conditions that would look insane to us here in the States — all thanks to Bitcoin.
Bitcoin: a beacon of hope. Kind of has a nice ring to it, doesn’t it?
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