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On Aug. 29, Grayscale Investments, a crypto asset management firm, achieved a significant win against the United States Securities and Exchange Commission in its pursuit to transform its over-the-counter Grayscale Bitcoin Trust (GBTC) into a publicly traded Bitcoin exchange-traded fund (ETF). U.S. Court of Appeals Circuit Judge Neomi Rao ruled in favor of Grayscale’s petition for review and vacated the SEC’s decision to reject the GBTC listing application. Previously, Rao indicated that the SEC failed to provide any justification for Grayscale’s alleged wrongdoing.
Initial excitement within the crypto community regarding the victory was moderated by the recognition of the limitations of the court’s ruling. “So far, every time they lose in court they just shamelessly say the judge got it wrong and pursue more shenanigans,” stated Gabriel Shapiro, general counsel at Delphi Labs. Austin Campbell, managing partner at Zero Knowledge Consulting, remarked: “For many companies, fighting back is incredibly expensive (you will win, but you’ll be bankrupt when you do) or you’re a financial conglomerate where the SEC can disrupt the rest of your business in the meantime. Gangster behavior.”
In the meantime, the SEC has delayed its decisions on six applications for spot Bitcoin ETFs. It has allocated a longer timeframe to review applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, and Valkyrie, along with the Wise Origin Bitcoin Trust proposed by Fidelity. The SEC will have an additional 45 days after publication in the Federal Register to evaluate the proposed rule changes that would permit the listing of these investment vehicles, extending the regulator’s timeline until October to approve, deny, or defer a decision.
Travel Rule comes into effect in the United Kingdom
Crypto asset firms in the United Kingdom may now begin to withhold certain crypto transfers to adhere to the new Travel Rule for cryptocurrencies that was implemented last week. Moving forward, if an inbound payment is received from an individual or entity in a foreign jurisdiction that has not adopted the Travel Rule, the virtual asset service provider must conduct a “risk-based assessment” to determine “whether to make the crypto assets available to the beneficiary.” This regulation also applies to UK residents wishing to send payments outside the United Kingdom.
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First unregistered securities sales claim against NFT offering in the United States
The SEC has charged Impact Theory — a media and entertainment firm based in Los Angeles — with conducting unregistered securities transactions by selling nonfungible tokens (NFTs) to investors from October to December 2021. It is alleged that the company raised nearly $30 million through the sale of NFTs referred to as Founder’s Keys, which were available in three tiers. The SEC stated that the company “encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business.”
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Crypto declared a property by a Chinese court
A People’s Court in China released a report on the legality of virtual assets, examining the criminal law characteristics of these digital assets. The court highlighted in its report that virtual assets, under the current legal policy framework, are still considered legal property and are protected by law.
The report titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case” recognized that virtual assets possess economic attributes and can thus be classified as property. Although China has classified all foreign digital assets as illegal by imposing a comprehensive ban, the report contends that virtual assets owned by individuals should be regarded as legal and safeguarded by law under the existing policy framework.
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Further reads
Kentucky regulator denies plan for subsidizing crypto mining facility
Binance Australia GM ‘really confident’ regulators will side with crypto
MiCA: The good, the bad and the ugly of the EU’s crypto rules
Pioneering the future with omnichain solutions: XGo ID and TapiocaDAO share insights
Will Evergrande’s collapse have a silver lining for crypto?
