US SEC Chair Gary Gensler concedes that losing in court after rejecting Grayscale's spot bitcoin ETF left the agency with little choice but to approve such ETFs
The appellate ruling requiring the SEC to revisit that rejection removed the basis for treating Grayscale’s proposal differently from approved bitcoin ETPs. Gensler’s concession makes the court decision, rather than a voluntary policy shift, the immediate explanation for the approval.
First-order effects
Grayscale and other spot-bitcoin ETF applicants gain an approved route to offer the product, while the SEC must implement an outcome it had previously opposed.
The SEC’s public rationale is narrowed: its prior rejection could not stand after judicial review of the differing treatment of comparable bitcoin products.
Second-order effects
Asset managers competing for bitcoin exposure can shift from lobbying over whether a spot ETF is permissible to competing on product design and distribution.
Future SEC decisions involving closely comparable crypto products face greater legal scrutiny, giving applicants a clearer basis to challenge inconsistent treatment.
Third-order effects
The episode points to courts becoming an important constraint on how the SEC sets crypto-market policy, especially where its approvals and denials appear difficult to reconcile.
If that pattern persists, crypto regulation may be shaped as much through litigation over administrative consistency as through new agency rules.
The trend: US crypto-market access is increasingly being determined by judicial limits on agency discretion rather than by a settled regulatory framework.
🚨NEW: Turns out the @SECGov DID hold a vote on the $BTC Spot ETFs. Here's the voting breakdown: Gensler: Approved Peirce: Approved Uyeda: Approved Crenshaw: Not Approved Lizárraga: Not Approved [image]
We should all be grateful to @Grayscale for pushing back against the SEC's arbitrary and capricious behavior, and clearing the way to get these spot BTC ETFs over the finish line. And of course to the DC Circuit, for affirming that the rule of law must prevail over politics. 2/3
Some key quotes from @HesterPeirce's 🔥🔥🔥 statement on the approval of spot Bitcoin ETFs (honestly makes me wonder if it's ever awkward in the SEC office 😂): “Today marks the end of an unnecessary, but consequential, saga.” “For reasons I have explained many times before,...
“[W]e have alienated a generation of product innovators within our space. Our unreasonable approach to these applications has signaled that regulatory prejudice against new products and services can lead us to sidestep the law and unreasonably delay product launches. The industry…
I like truly cannot believe after all this, two SEC commissioners still voted against the spot ETFs It's like the states removing Trump from the ballot - it's just a total breakdown of government Check and balances, nothing works at all if individuals just stop caring about law
Finally Commissioner Caroline Crenshaw released a statement that she disagrees with the approval order: The Global Spot Markets Underlying the Bitcoin ETPs are Marred by Fraud and Manipulation, Concentrated, and Without Adequate Oversight “Fraud and manipulation that impacts...
💥 Commissioner Mark Uyeda also has strong words for the SEC — it's wonkier, but starts: I have strong concerns with three aspects of the order (the “Approval Order"): [2] 1) The Approval Order improperly attempts to validate the application of the “significant size” test to...
This is what a reasonable regulator (and someone capable of their job) looks like. A fair and balanced application of the law, and a willingness to self-critique. Respect. 🫡
And to Eric's point, regardless of what you think about Grayscale... This particular “conclusion” by the SEC was the thrust of Grayscale's case, which they won. They paved the regulatory path for everyone else. https://x.com/...
Congrats to Grayscale btw, they are why all this happened. They fought the law and won. Even so I was doubtful they'd make it to starting gate but they have. Now I owe @JSeyff and @NateGeraci a sushi lunch.