Grayscale Bitcoin Trust at Issue in Court

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right. Time to check in with coin gold policy and regulation. Managing editor Nick Day who is also the editor of Coins, the State of crypto newsletter. Good morning, Nick. All right. So the gray scale Bitcoin trust discount to net ass value falling to its lowest level in a month ahead of oral arguments in federal court related to gray scales lawsuit against the SEC Note to viewers, Gray Gill and Coindesk are both owned by DC G. Nick. What are the expectations ahead? Hey, good morning. Yeah. So, uh in, you know, a little under half an hour, the DC Appeals Court is going to kick off. There is I believe a different case right before uh gray scale. So it might be a little bit of time before we get to Grayscale. But basically, the company is going to argue that the SEC has been arbitrary in how it approaches Bitcoin ETF approvals. Uh They're going to say that the fact that Bitcoin futures ETF S exist but uh not any spot market ETF S uh mean that the SEC has kind of, you know, picked a specific product but it's being inconsistent in how it OKS these types of products. Um you know, basically the argument being that if you can easily manipulate this Bitcoin spot market prices, what's stopping you from easily manipulating Bitcoin futures market prices? The sec for its part is going to argue that they're very different that spot market uh products are based on, you know, spot markets, they're based on, uh, Bitcoin whose price is, you know, going to trade on exchanges, some that are in the US, some that are not, some that are regulated, some that are not, uh, whereas Bitcoin futures ETS are based on products that are settled in cash and traded solely on CME, um, it's gonna be, you know, I imagine we're gonna hear a lot about the way, you know, uh, these types of products are structured about surveillance sharing agreements or market manipulation concerns. And, um, you know, it doesn't seem like we'll have an actual decision to say, but it'll be interesting to see, you know, if the judges ask any questions or how they approach it, you know, over the course of the, it should be a fairly short hearing from what I understand. Well, I, I, it, it seems as if the Alameda people would be thrilled if this turned into an ETF of according to this other case. But, um, I go moving on to because this was kind of a an interesting turn of events, isn't it that the judge seems to be taking a side on it uh against the SEC and saying, hey, you know what finance wants to buy it? Yeah, why not? Is that, is that, is that the proper reading of what's going on here? I, I think it's more of a case of, he doesn't know what the SEC is doing in terms of timeline. So the context here is, of course, Voyager and Binance us have been uh you know, in a multiday hearing at this point to decide whether or not the court should approve Voyager's restructuring plan, its bankruptcy restructuring plan to sell itself to Binance Us. Now, the AC C has objected on a couple of different points. One being, you know, uh we talked about this last week and yesterday even, but SEC staff believe that Binance Us might be operating an unregistered securities exchange. They believe that the VGX Token issued by Voyager might be an unregistered securities offering. Uh They've expressed as much to the judge and last week, the judge, you know, basically raised the SCC over coal saying he didn't know uh he didn't have any guidance from the SEC. He didn't have any specifics as to what they were objecting to yesterday. The SCC also objected to some of the disclosures made in presenting this plan to creditors. And once again, the judge had an issue with, um you know, how much information the SCC has shared and his key point seemed to be that the SEC has the ability to, you know, conduct rule making and evaluate these kinds of things. But under a bankruptcy, uh, situation, he doesn't know how long it's going to take and he can't prolong a proceeding indefinitely while the SEC does its investigations or whatever it is they're doing. So, his concern is that he needs to move this bankruptcy proceeding along. He needs to get it to a point where creditors can start recovering some of their funds. Uh Whereas if he waits for the SEC, um you know, it could take a while, he even points out that it could uh you know, it could take the SCC Congress and other regulators coming to, you know, a party and like organizing, figuring out who has what jurisdiction and that's not gonna happen anytime soon at all. So the the judge is concerned mainly from that perspective, I would say. Mhm. Meanwhile, uh one other story we're watching uh this week is the White House Press Secretary uh said that the presidential administration is watching Silver Gates situation. What did she have to say? Yeah, so this was during a press briefing yesterday, White House Press secretary, Jean Beer uh said that the White House is aware of it and monitoring the situation. Um She pointed out that a number of crypto companies have had issues over the last couple of months and you know, that's obviously very true. We've seen we're covering, you know, a number of bankruptcies alone. Um The big thing is that, you know, she said that us President Joe Biden has called on Congress to do something and he will continue to do so. So that seems to be where we are. Um, you know, if Congress acts great. Uh Right now it's still early days in the session. Uh and she also pointed out that bank regulators have been warning about how banks might get into crypto. So, you know, not a whole lot new there, but it is striking that the White House is, you know, clearly paying attention, certainly, but still no framework as to how any sort of regulatory clarity will uh come about. All right, Nick, thank you so much. That was Coindesk, managing editor of Global Policy Regulation Day. Don't forget to sign up for the state of crypto newsletter on coindesk dot com.