VTI - Grayscale: A Win

2023-09-01 16:22:50 ET

Summary

• Grayscale wins legal victory in its attempt to offer a spot bitcoin exchange-traded fund.
• SEC's rejection of Grayscale's application is proven wrong, but the ruling does not settle the debate.
• The industry is hopeful for more favorable decisions and a working solution for digital currencies in the future.

Grayscale won a battle.

But, this is still not the end of the war.

On Tuesday, Grayscale scored "a resounding legal victory" in its attempt to offer a spot bitcoin exchange-traded fund, or ETF.

The SEC was wrong, ruled a federal appeals court , to reject Grayscale's application to convert its flagship Grayscale Bitcoin Trust, into an EFT.

This had earlier been approved in 2015.

The Trust contains bitcoin valued at more than $15.0 billion.

The industry is still moving to find out where the boundaries are. Since 2021, the SEC allowed bitcoin futures EFTs, but argued that spot funds were prone to manipulation since crypto tokens trade on largely unregulated markets.

This ruling does not settle the debate. But, it is another step into the future to find the way these markets should operate.

Looming in the future is another proposal from the world's largest asset management manager, BlackRock (BLK).

Note that VanEck and Wisdom Tree also have proposals on the books.

Although preliminary deadlines are set for this week, it is highly likely that further decisions will be put off 'til mid-October.

However, the was a lot of cheer going around in digital asset groups with the outcome of this decision.

There is some hope that a breakthrough has been made and more decisions, favorable to the industry, will be forthcoming.

If the ruling holds, the SEC case will definitely be weakened.

Where does this go?

The SEC will still battle the move because of its concern about market price deals and how the market will price the asset at the end of the day.

These are areas that all need to be firmed up in the future.

But, as stated above, this is a step that many people feel is in the right direction.

Digital currencies are here.

They are not going to go away.

So we will continue to see steps this way and that to move toward a working solution.

Certainly, the industry was not going to get the full freedom of an independently libertarian offering, but there has been plenty of effort exerted to keep regulations to a minimum.

This battle is just a hint of all the debate and discussion that will take place as the digital world moves on.

Personally, I am for a balance that tends toward less regulation, but I do not go to the extreme of no regulation. We need to achieve a working balance that protects but does not overly constrain the markets.

It takes time...and effort...but working these issues out over time is still the best way to go.

As far as investing. As the path gets clearer, the risk of the investment goes down.

Right now, there is so much uncertainty, both in terms of how the crypto will be used and how the regulators will finally structure the industry, that uncertainty remains high.

But, this is certainly an area to keep watch of. Things are going to happen.

Investors are just going to have to find the particular movement they feel confident in entering this market.

This is something each investor is going to have to decide for him- or herself.

With something so new, one must take care to be aware of just what it is one is getting into.

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