The U.S. Securities and Exchange Commission (SEC) suffered a major setback in its efforts to regulate SPIKES futures, a volatility index product that directly competes with the popular VIX futures. This situation is expected to affect a crypto money lawsuit as well. Here are the details…
Court defeat for SEC
The U.S. Court of Appeals overturned the SEC’s decision to grant an exemption to MIAX, the exchange that offers SPIKES futures. The court ruled that the SEC’s decision was “arbitrary and capricious” and lacked adequate explanation. The SEC had argued that the exemption was necessary to encourage competition in the volatility index market currently dominated by Cboe’s VIX futures. However, the court disagreed with this argument, stating that the SEC failed to show how the exemption would achieve its intended purpose.
The court also noted that the SEC did not address some of the potential disadvantages of the exemption that could give an unfair advantage over VIX futures, such as potentially more favorable tax treatment and lower collateral requirements for SPIKES futures. This decision is also important for the legal battle between Grayscale, a cryptocurrency company, and the SEC over Bitcoin ETFs. Notably, two of the three judges involved in the SEC’s lost case against SPIKES futures are also part of the panel responsible for deciding the outcome of the Grayscale case.
Critical decisions for the cryptocurrency company
Meanwhile, Grayscale recently submitted a comment letter to the SEC on spot Bitcoin ETF applications, including its own Grayscale Bitcoin Trust (GBTC) application. The company argued that given that it has previously approved Bitcoin futures ETFs, the SEC already has sufficient reason and authority to approve spot Bitcoin ETFs. Grayscale firmly stated that the spot Bitcoin ETF application should be approved on equal terms with other Bitcoin ETF applications. The company also stressed that investors should be treated fairly when deciding on the SEC’s application for an ETF, whether independently or due to a court order.
Grayscale categorically stated that the spot Bitcoin ETF application deserves approval if the SEC is ready to approve other Bitcoin ETF applications. Developments in SPIKES futures regulation and the ongoing Grayscale litigation could have broader implications for volatility index products and cryptocurrency-related ETFs. However, the results of these cases are still pending and Grayscale’s decision is expected after September. As we have also announced as Kriptokoin.com, it is thought that the US SEC may be at a difficult point forcing the Grayscale application to be approved.
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