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Bitcoin ETF Approved for Grayscale by US Court

36 points by koolba 3y ago

koolba 3y ago
Here's the actual ruling: https://storage.courtlistener.com/recap/gov.uscourts.cadc.38827/gov.uscourts.cadc.38827.1208547574.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.cadc.38...
playday 3y ago
> It is a fundamental principle of administrative law that agencies must treat like cases alike. This is from the circuit judge and is a big part of the problem the SEC faces. The SEC has expanded its jurisdiction so far that it must discriminate between favoured and disfavored entities. From the perspective of the SEC, it’s necessary in the face of innovation and the risks of new players. However it also means their legal footing regarding crypto generally is quite weak, as seen both here and in the recent ripple case (court ruled that investment contracts about digital assets are securities, but the actual assets are not securities).
yieldcrv 3y ago
I double dare the SEC to appeal this to the Supreme Court, this Supreme Court!? Canon event
Guvante 3y ago
I feel like the ruling just says "futures cannot be less risky than assets" which is a weird call for a judicial review panel to make. Especially since it wasn't financial risk but fraud tracing risk. I don't believe that is a call they can't make just that the ruling as I read it doesn't really justify it. Simply saying that Greyscale claims it and that was it. They do say "both are impacted by changes" but that feels like an overly simplistic line to draw to attack an explicit consistent decision by the SEC.
- Nevermark 3y ago
  Wouldn't the call be saying direct holdings are less risky than futures? Futures have already been approved. In general futures are much more risky than long/short holdings because they are effectively highly leveraged. Which would also be true if there is market manipulation. Any bumps in the original assets price get magnified in futures pricing. So it is odd that the SEC approved futures but not the direct asset itself. Unless anyone here knows of a good argument why the direct asset could carry more risk, manipulation or otherwise, than its futures?
  - Guvante 3y ago
    Futures manipulation is hard when the future is controlled. Futures aren't as impacted by price as you imply under the effects of market manipulation. While you might have a change due to expected resiliency generally futures don't shift like assets do under temporary manipulation. If it only lasts a day or two futures don't have time to shift.
    - Nevermark 3y ago
      I see, so if I get this right, futures are valued based on the expected asset value at the future’s expiry date - which tends to be more sensitive to trends (which are harder to manipulate), and less sensitive to momentary price fluctuations (which are much easier to manipulate)? Except as the expiry date approaches. At that time fluctuations in assets and and derivatives must approach lock step, with the derivative having a magnified response. So there should be at least that critical time (approaching expiration) when market manipulation impacts derivatives more proportionally than base asset prices.
      - Guvante 3y ago
        Volume matters and if the majority are outside that window it shouldn't impact the majority. Again though the bar for Judicial overriding a consistent ruling should be very high. And they consistently made this choice.
archo 3y ago
https://archive.is/1afwZ https://archive.is/1afwZ

36 points by koolba 3y ago

Here's the actual ruling: https://storage.courtlistener.com/recap/gov.uscourts.cadc.38827/gov.uscourts.cadc.38827.1208547574.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.cadc.38...

playday 3y ago

> It is a fundamental principle of administrative law that agencies must treat like cases alike. This is from the circuit judge and is a big part of the problem the SEC faces. The SEC has expanded its jurisdiction so far that it must discriminate between favoured and disfavored entities. From the perspective of the SEC, it’s necessary in the face of innovation and the risks of new players. However it also means their legal footing regarding crypto generally is quite weak, as seen both here and in the recent ripple case (court ruled that investment contracts about digital assets are securities, but the actual assets are not securities).

yieldcrv 3y ago

I double dare the SEC to appeal this to the Supreme Court, this Supreme Court!? Canon event

Guvante 3y ago

I feel like the ruling just says "futures cannot be less risky than assets" which is a weird call for a judicial review panel to make. Especially since it wasn't financial risk but fraud tracing risk. I don't believe that is a call they can't make just that the ruling as I read it doesn't really justify it. Simply saying that Greyscale claims it and that was it. They do say "both are impacted by changes" but that feels like an overly simplistic line to draw to attack an explicit consistent decision by the SEC.

Nevermark 3y ago
Wouldn't the call be saying direct holdings are less risky than futures? Futures have already been approved. In general futures are much more risky than long/short holdings because they are effectively highly leveraged. Which would also be true if there is market manipulation. Any bumps in the original assets price get magnified in futures pricing. So it is odd that the SEC approved futures but not the direct asset itself. Unless anyone here knows of a good argument why the direct asset could carry more risk, manipulation or otherwise, than its futures?
- Guvante 3y ago
  Futures manipulation is hard when the future is controlled. Futures aren't as impacted by price as you imply under the effects of market manipulation. While you might have a change due to expected resiliency generally futures don't shift like assets do under temporary manipulation. If it only lasts a day or two futures don't have time to shift.
  - Nevermark 3y ago
    I see, so if I get this right, futures are valued based on the expected asset value at the future’s expiry date - which tends to be more sensitive to trends (which are harder to manipulate), and less sensitive to momentary price fluctuations (which are much easier to manipulate)? Except as the expiry date approaches. At that time fluctuations in assets and and derivatives must approach lock step, with the derivative having a magnified response. So there should be at least that critical time (approaching expiration) when market manipulation impacts derivatives more proportionally than base asset prices.
    - Guvante 3y ago
      Volume matters and if the majority are outside that window it shouldn't impact the majority. Again though the bar for Judicial overriding a consistent ruling should be very high. And they consistently made this choice.

archo 3y ago

https://archive.is/1afwZ https://archive.is/1afwZ