It's been a long time coming but Grayscale finally had their day in court. And by all accounts, it seemed like they came out on top.

For those who haven't been following the GBTC saga, the SEC previously denied Grayscale's request to convert their Bitcoin Trust from a closed-end fund to an exchange trade fund (ETF).

And now, it's in the hands of the courts.

Spot vs. Futures

Although both sides had plenty of arguments to share, the main issue seemed to center around the difference between spot vs. futures. 

Think of the spot market like buying groceries at the store and taking them home right away, while the futures market is like pre-ordering groceries for a later date at a set price.

Why does this matter?

Because the SEC actually approved a Bitcoin futures ETF back in October 2021. But of course, they still won't allow a spot ETF.

Judge Rao seemed to hone in on this by saying:

"It seems to me that [what] the Commission really needs to explain is how it understands the relationship between bitcoin futures and the spot price of bitcoin... it seems to me that... one is just essentially a derivative. They move together 99.9% of the time. So where's the gap, in the Commission's view?"

The judge then went a step further and asked what would happen if the court agreed with Grayscale...

Would the SEC approve a spot ETF or go back on its approval of a Bitcoin futures ETF?

At which point, the SEC's lawyer was unable to answer...

Market reaction

On a day where bitcoin traded relatively flat, shares of GBTC rose 9.6% and the GBTC discount to net asset value narrowed to 35%.

Clearly, the market interpreted yesterday as a favorable hearing for Grayscale.

Here's what North Rock Digital founder Hal Press had to say:

"Think it's likely SEC loses their court case. Yes, they can appeal but they are starting to look really bad and an ETF approval is actually a chance for them to look like they aren't just anti-crypto while also furthering regulation. We have consulted many experts and feel ETF approval this year is a real possibility."

Moving forward

Although the courts seemed to be on Grayscale's side during the hearing, you never want to count your chickens before they hatch.

For now, onlookers will eagerly await the final ruling which could take three to six months.

A couple of days ago, we reported on the SEC's accusations against Binance US with the agency claiming that the crypto exchange is selling unregistered securities.

These allegations were made in a bankruptcy hearing for Voyager Digital as part of the objection to the sale of the failed crypto lending firm to Binance US.

Well after four days in court that involved regulators, investors, and lawyers from Voyager, Judge Michael Wiles said he would give Voyager permission to close the deal with Binance US.

Wiles wasn't impressed with the SEC's remarks and rejected the agency's claims that parts of the deal violate federal law, calling their objections "vague".

Here's what he had to say in court about the ordeal:

"I cannot put the entire case into indeterminate deep freeze while regulators figure out whether they believe there are problems with the transaction and plan," and "[W]e can't just put everything on pause just because we don't know for sure how the regulators will eventually make up their minds on points that they seem to have been debating for years."

So, what happens next? 

While everything seems like a done deal, Voyager could still walk away from the sale. Financial advisors for the bankrupt company said they'll need several weeks to review the deal and question Binance US about their regulatory compliance and commitment to the acquisition.

If Voyager decides to follow through with the sale to Binance US, the deal would be valued at approximately $1.3 billion, resulting in customers receiving about $100 million more than they would if Voyager were to liquidate on its own.