In a setback for the US Securities and Exchange Commission (SEC), a court ruling on December 19, 2023, granted a motion to vacate the agency’s rule on share repurchase data. The rule, which required issuers to report day-to-day repurchase data every quarter, was deemed arbitrary and capricious by judge Jerry E. Smith of the United States Court of Appeals for the Fifth Circuit.
The SEC had adopted amendments on May 3, 2023, regarding disclosure requirements for securities repurchases. The new rules included the provision for issuers to provide daily repurchase activity on a quarterly or semi-annual basis.
Grayscale Lawsuit: SEC’s Decision Ruled “Arbitrary and Capricious”
In another blow to the SEC, a panel of judges in the US Court of Appeals for the District of Columbia Circuit ruled that the agency’s decision to deny Grayscale a spot Bitcoin ETF approval was “arbitrary and capricious.” The judges criticized the SEC for its inconsistent decisions regarding Bitcoin futures ETFs and highlighted its failure to recognize the relationship between spot and futures markets.
As a result, Grayscale’s petition for reviewing the denial of spot Bitcoin ETF approval was granted.
Hot Take: SEC Faces Ongoing Legal Challenges in Crypto Cases
The recent setbacks faced by the SEC in court highlight the challenges it continues to face in regulating the crypto industry. These rulings demonstrate that judges are scrutinizing the agency’s actions and holding it accountable for acting arbitrarily or failing to conduct thorough analyses.
With Ripple’s partial victory in the XRP lawsuit and now these rulings against the SEC’s rule on share repurchase data and Grayscale’s spot Bitcoin ETF approval, it is evident that the agency’s approach to regulating cryptocurrencies is facing increasing scrutiny and pushback.
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