On August 29, crypto asset manager Grayscale Investments scored a major victory against the US Securities and Exchange Commission in its effort to convert the over-the-counter Grayscale Bitcoin Trust (GBTC) into a Bitcoin exchange-traded fund (ETF). US Circuit Court of Appeals Judge Neomi Rao ordered that Grayscale’s review petition be granted and the SEC’s order denying GBTC’s listing application vacated. Previously, Rao said the SEC did not “provide any explanation” for why Grayscale was wrong.

The crypto community was initially enthusiastic about the win, but understood the limitations of the court’s decision. “So far, every time they’ve lost in court, they’ve openly said the judge was wrong and pulled more tricks,” said Gabriel Shapiro, general counsel at Delphi Labs. According to Austin Campbell, managing partner at Zero Knowledge Consulting: “For many companies, fighting back is either very expensive (you’ll win, but you’ll go bankrupt if you do), or you’re a financial conglomerate where the SEC can destroy the rest of your business for a while. Gangster behavior.”

Meanwhile, the SEC has delayed its decision on six Bitcoin spot ETF applications. It has set a longer period to review applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, and Valkyrie, as well as Fidelity’s proposed Wise Origin Bitcoin Trust. The SEC will have another 45 days from publication in the Federal Register to consider the proposed modification to allow listing of investment vehicles, which would give regulators until October to approve, reject or delay the decision.

Travel Rules come into force in the UK

Crypto asset companies in the UK can start holding certain crypto transfers to comply with the new Travel Rules for crypto that came into effect last week. From now on, if an incoming payment is received from a person or entity from a foreign jurisdiction that has not implemented the Travel Rule, virtual asset service providers must conduct a “risk-based assessment” regarding whether to “make crypto assets available to the beneficiary.” The same rules apply to UK residents wishing to send payments outside the UK.

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The first allegation of selling unregistered securities against NFT offerings in the United States

The SEC accused Impact Theory, a Los Angeles-based media and entertainment company, of engaging in unregistered securities transactions by selling non-fungible tokens (NFTs) to investors from October to December 2021. The SEC allegedly raised nearly $30 million through NFT sales called Founder’s Keys, which are offered in three tiers. The company “encourages potential investors to view the purchase of Founders Key as an investment in the business,” according to the SEC.

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China says cryptocurrency properties are protected by law

The people’s court in China published a report on the legality of virtual assets, analyzing the legal attributes of digital assets. The court noted in its report that under the current legal framework, virtual assets remain legally owned and protected by law.

The report “Identification of Property Attributes of Virtual Currency and Disposition of Property Involved in the Case” recognizes that virtual assets have economic attributes and therefore can be classified as property. Although China has declared all foreign digital assets illegal by implementing a blanket ban, the report argues that virtual assets held by individuals should be considered legal and protected by law under the current regulatory framework.

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