What the SEC vs Ripple ruling means for the Grayscale (GBTC) vs SEC case

The biggest crypto news of the week was the remarkable victory by Ripple Labs in a prolonged case in New York. The victory unleashed a major rally in cryptocurrencies, with XRP and XLM prices surging by more than 50%. Crypto investors are now focusing on the ongoing Grayscale vs SEC case in the US.

Grayscale vs SEC lawsuit

The SEC suffered a big blow when a New York judge ruled against it in New York, as we wrote here. The closely-watched case alleged that XRP was a security that the SEC should regulate. This was a major blow for the SEC since the agency has become more combative in the past few months.

It has major implications in the crypto industry. A victory by the SEC would have led to more lawsuits against other cryptocurrencies. It would also have led to more SEC lawsuits against other cryptocurrencies. For one, the agency has already warned that over 60 popular cryptocurrencies like Cardano and Polygon were securities.

Now, the focus shifts to another important case that could have more implications for the crypto industry. As you are aware, a major theme in the market recently has been ETF applications by companies like Ark Invest and Blackrock. 

The SEC rejected previous applications by companies like VanEck and Ark citing market manipulation risks. In the aftermath, Grayscale filed a lawsuit against the SEC for denying it the ability to convert the Grayscale Bitcoin Trust into an ETF.

This case is still going on and analysts expect that it will conclude in the coming months. Grayscale hopes that it will conclude in this quarter.

A victory by Grayscale could have major implications for cryptocurrencies. In the short term, it will allow the conversion of the $20 billion Grayscale Bitcoin Trust (GBTC) into an ETF. As a result, the significant discount that has existed in GBTC would likely be sealed.

"It's a moment of validation," says @Grayscale CEO @Sonnenshein on $BLK aiming to launch a $BTC spot ETF. "To see the largest asset manager in the world publicly commit to advancing their crypto efforts only lends validity to the asset class and the staying power that it has." pic.twitter.com/agt7emHWt0

— Last Call (@LastCallCNBC) July 11, 2023

More ETF proposals

The victory by Grayscale will also open doors for more Bitcoin ETF proposals in the near term. Companies like Blackrock, Invesco, and Ark Invest have already sent their applications for their Bitcoin ETFs. Analysts believe that these funds are vital for more institutional flows to the crypto industry.

There is another implication. If a Bitcoin ETF is accepted, these same companies will apply for more cryptocurrency ETFs. The most ideal applications will be for major coins like Ethereum, Ripple, Litecoin, and Bitcoin Cash.

Ethereum could have some challenges since the SEC still sees it as a financial security because of its staking capabilities.

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