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DK
@dkcrypto13
Had some talks with crypto & securities lawyers re $ETH ETF approval. Will try to put what I heard in a 🧵 here, just listing things. To be clear: not legal advice, not financial advice. Opinions of people and conclusions of a frog with a hockey stick only. DYOR. I know nothing
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DK
@dkcrypto13
1/ What can SEC do? Come May 23rd, SEC can deny, approve or ask issuers to pull applications. In case of denial or pulling, issuers can re-apply immediately, starting a new max 240 day clock ARK is first on block and may just agree to pull. In June, Grayscale is the big one.
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DK
@dkcrypto13
They might like their chances in court and ask the SEC to come out with a formal answer. If the SEC denies and Grayscale sues, it could take about a year to resolve, which is longer than 240 days and a potentially new head of the SEC given election in between…
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DK
@dkcrypto13
2/ What happens in a court battle between issuers and the SEC? The key will be the reason the SEC uses to deny. It looks like these could be: - correlation between futures and spot - alleging $ETH is a security - a technicality None of these look strong.
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DK
@dkcrypto13
If the SEC denies on the basis of correlation, then you’ll have several experts showing slightly different numbers for slightly different time scales, but it is a matter of time before the all converge and it is a weak case to argue as public documents already show.
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DK
@dkcrypto13
If the SEC denies on the basis of $ETH being a security, they are picking a fight with the CFTC. They would basically say that $ETH futures and their ETFs are all security products. Which goes against years of practice now & implicit approval so far.
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DK
@dkcrypto13
Even if the SEC were to claim that the merge changed everything that is also now 18 months ago and it seems likely even a judge would ask the simple question “why did you not intervene before?”, let alone opposing counsel. So far, SEC has separated staking in suits so an approval of the ETF ≠ approval of staking
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DK
@dkcrypto13
So that leaves a technicality. The general feeling is that, if there is one, it is one that Gary still has to come up with. Ie the filers are very experienced, all topics have been dealt with in regards to $BTC approvals, so it will be tough to pull this off. May be poor case too
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