In a financial world where every move seems to echo with the clink of coins and the rustle of bills, a seismic shift has rocked the securities market. On February 6, 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted two new rules with a 3-2 vote along party lines. (SEC; Sidley). These rules aim to further define what it means to be a “dealer” and “government securities dealer” under the Securities Exchange Act of 1934. Id. The regulatory scheme requires implicated market participants to register with the SEC as “dealers” and conform to various regulatory requirements. Id. Despite the SEC’s good-faith attempt to curtail de facto market makers and promote fairness among market participants, the new rules have been met with harsh criticisms due to their various impracticalities. (Fluhr, et al., DLA Piper; SEC).

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On January 10, 2024, the SEC approved the listing and trading of several spot bitcoin exchange-traded products (“ETP”), a type of ETF. (SEC). The SEC approved Grayscale’s spot bitcoin ETF application, along with ten others, including BlackRock and Fidelity applications. (Mark Maurer, The Wall Street Journal; Crystal Kim, Axios). The SEC’s approval came one day after an unauthorized individual posted a fraudulent message on the Commission’s social media account on X, formerly known as Twitter, falsely claiming that the agency had approved the products to be traded. (Hannah Lang, et al., Reuters). The SEC quickly removed the misleading post. Id. Regardless, the SEC’s decision was in response to the D.C. Court of Appeals decision. (SEC). The Appellate Court vacated its decision and remanded the matter to the SEC to decide whether to approve Grayscale’s spot bitcoin ETF application. Id. The Commission ultimately decided to approve the listing and trading of Grayscale’s spot bitcoin ETF, citing various reasons. Id.

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As the spotlight on climate change intensifies, federal agencies, including the U.S. Securities and Exchange Commission (“SEC”) and the European Commission in the European Union (“EU”), are grappling with the environmental impacts generated by companies. The SEC, traditionally tasked with creating and enforcing policies around the investment of money, has added financial climate change consequences to its list of responsibilities. (SEC). Most recently, the SEC has doled out a new proposed climate disclosure rule, intended to create consistent reporting guidelines for publicly traded companies, curb corporate greenwashing, and protect investors. (Jessica Corso, Law360; Michael Copley, NPR; SEC). While many consider the SEC’s attempt to combat climate change admirable and well-intended, opponents to the proposed rule express concerns about its impact on farmers and small businesses. (Jim Tyson, CFO Dive). 

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With a market cap valued at over a staggering $1 trillion, cryptocurrency’s (or “crypto(s)”) exponential market growth has led to a hotly debated, new-found regulatory force by the U.S. Securities and Exchange Commission (“SEC”). (Forbes). The SEC’s eager regulatory control over crypto has fueled legal battles, with the most recent development involving investors advocating for bitcoin exchange-traded funds (“ETF(s)”). (Aislinn Keely, Law360). The Commission has historically resisted investor’s efforts. (Hannah Lang, et al., Reuters). However, a recent District of Columbia Court of Appeals decision, dubbed a victory for plaintiff and digital asset management company Grayscale Investments (“Grayscale”), has proven hopeful to investors. Id. This post explores the Grayscale decision, the SEC’s and Grayscale’s respective arguments, and both the narrow and broad implications of the decision against the backdrop of the SEC’s position on cryptocurrency.  

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