Anticipated SEC-Grayscale Decision Could Propel Crypto into New Momentum, Predicts John Deaton

John Deaton, a well-known advocate for Ripple and the founder of Crypto-Law.US, recently shared his views on a tweet by Bloomberg’s top ETF analyst, Eric Balchunas. The tweet addressed the imminent verdict expected from the court relating to a lawsuit filed by Grayscale against the U.S. Securities Exchange Commission (SEC).

The bone of contention in the lawsuit is the refusal of the SEC to approve the conversion of Grayscale’s Bitcoin Trust (GBTC) into a Bitcoin spot Exchange-Traded Fund (ETF). The court is set to announce its decision today. The crux of the matter can be summarized as follows:

• Grayscale is suing because the SEC denied its request to convert the Bitcoin Trust into a Bitcoin spot ETF.
• The verdict is eagerly awaited by many within the cryptocurrency industry and could have a significant impact on cryptocurrency trading.

According to Deaton, there is a high probability that Grayscale will come out on top in their legal battle with the SEC. If this were to happen, it could provide a significant boost to the momentum of the cryptocurrency sector. Here’s a glimpse into his thoughts:

1. Grayscale, under its CEO Michael Sonnenshein, initiated the lawsuit against the SEC in June last year following the rejection of their proposal to convert GBTC into a full-scale Bitcoin spot ETF.
2. Sonnenshein, during an interview with CNBC, accused the SEC of acting in an “arbitrary and capricious” manner. He highlighted the inconsistencies in the SEC’s practices by pointing out that they had approved several Bitcoin futures ETFs but declined Grayscale’s spot Bitcoin ETF proposal.
3. A key concern expressed by the SEC was that the proposed ETF did not adequately take into consideration the various factors unique to this type of product, including ways to avert potential market manipulations.
4. Sonnenshein concluded that the SEC’s treatment effectively constituted discrimination against companies seeking to establish BTC spot ETFs.
5. Deaton voiced his support for Grayscale through a response to Balchunas’ tweet. He indicated that he would be closely monitoring the SEC-Grayscale issue and suggested that a positive outcome for Grayscale would provide a significant boost to the wider cryptocurrency market.
6. While Deaton acknowledges the difficulty in challenging the SEC’s “arbitrary and capricious” behavior, he opines that the regulatory body may lose the case if any cryptocurrency company were to resist its stance on Bitcoin spot ETFs.

Given the specifics of the current case, Deaton expressed his belief that it would be surprising if the SEC were to emerge victorious.

It’s worth noting that the SEC has had its share of defeats and victories recently in lawsuits involving the cryptocurrency space. One such case involving Ripple was partly decided in Ripple’s favor, causing significant market effects:

• Judge Analisa Torres ruled on the SEC-Ripple case, classifying Ripple’s retail XRP sales as non-securities. However, the sales of XRP to financial institutions were labeled as security sales.
• The verdict was lauded as a significant victory for the cryptocurrency community by Ripple. Following the ruling, several leading exchanges proceeded to list XRP once again, triggering a rise in its price.
• Despite the partial setback, the SEC is far from admitting defeat. They have announced their intention to appeal the ruling, specifically the treatment of “programmatic” sales of XRP by Ripple and XRP sales made through cryptocurrency exchanges.

It’s crucial to monitor these legal developments as they unfold since they play a significant role in shaping the future of the cryptocurrency market.