Gary Gensler's SEC has really been faceplanting in the courts lately.

Why it matters: The regulated community is liable to smell blood in the water. Companies settle when they believe they will lose in court or that the price of the fight will be too high — but every loss for the SEC makes it less likely the next company it goes after will settle, Brady writes.

Catch up fast: The SEC's most recent loss came on its reasoning to keep Grayscale's giant bitcoin fund from converting to an exchange-traded fund.

• The federal appeals court for the District of Columbia pointed out several inconsistencies between the commission's decision on exchange-traded funds (ETFs) tied to bitcoin derivatives and Grayscale's product, built on actual bitcoin.
• The first bitcoin ETF was approved in October 2021.

Previously, the agency received an arguably more significant defeat in the lawsuit brought by Ripple over the XRP cryptocurrency stewarded by the firm.

• That decision dealt a blow to the often-repeated position from the SEC that basically all cryptocurrencies are securities.
• The SEC sought approval to appeal the decision even though the larger case is not entirely settled.

A loss in that case would be a further blow.

Quick take: It's not so much that either of these matters is settled but that each loss indicates weaknesses in the agency's overall analysis.

• SEC chair Gensler has gone to considerable lengths to make his views seem like simple, common-sense applications of law.
• When judges disagree, it bolsters the industry argument that the law needs an update.

What they're saying: "The SEC's losses have failed Democrats who care deeply about consumer protection and now have to realize that giving up a seat at the legislative table would be a missed opportunity," Faryar Shirzad of Coinbase's policy team tells Axios via a spokesperson.

What we're watching: Two giant tests loom, the agency's cases against the world's largest crypto exchange, Binance, and its case against the largest exchange focused on the U.S., Coinbase.

• Both companies have deep pockets and both have evinced a willingness to fight.
• The SEC filed a very similar complaint against Bittrex that it has against the larger exchanges, but that ended in a settlement with a $24 million fine (which, in crypto terms, is not a lot). On the other hand, Bittrex left town.

The latest: The SEC has already lost one bid in the Binance case. It sought a restraining order to freeze the firm's assets in the U.S. It got a compromise.

• Yes, but: The SEC just filed a motion under seal, which is unusual. It could mean it's linked to a much larger case, perhaps from the DOJ.

The bottom line: The SEC no longer looks unbeatable.

Crystal Kim contributed reporting.

There are more than a hundred ways to invest in crypto, but a U.S. spot bitcoin ETF ain't one, Crystal writes.

• Maybe that'll soon change.

Details: 37 providers in 16 countries are reppin' here, ETFGI data show.

• Altogether, they have $9.2 billion in assets under management, up almost 60% year-to-date through the end of July.
• Of note: ProShares Bitcoin Strategy ETF (BITO), a BTC futures fund, has taken the lion's share of net new assets, gathering more than $320 million in that period.

Quick take: It's time — only a matter of when.

As soon as the U.S. courts answered one major question — yes, the SEC's reason for denying Grayscale a spot bitcoin ETF was arbitrary and capricious — crypto had another one:

• Wen... spot bitcoin ETF?

Reality check: That question is still somewhat in the hands of the SEC, Axios' Pete Gannon writes.

• While the overall likelihood of approval increased substantially yesterday, the federal appeals court ruling did not flip a switch on Grayscale's, or any other application, in front of the SEC.

Between the lines: The regulator said yesterday it was reviewing the court's decision to determine next steps.

• At least two of those steps would kick the ETF can down the road a bit: appealing the decision or denying the application again with a different justification, likely inviting another court challenge.
• In a best-case scenario for the spot-bitcoin ETF crowd, the SEC could accept the ruling and approve the applications. But even in this scenario, final reviews and approvals would likely come in early 2024, Bernstein analysts note.

Zoom out: The market yesterday reacted as if spot-bitcoin ETFs are now a when. Not an if.

• Shares in GBTC, the Grayscale trust it is seeking to convert to an ETF, spiked over 17% yesterday following the ruling.
• The price of bitcoin rose over 6%.
• Publicly traded shares in Coinbase, listed as the custodian for several spot-ETF applications, jumped nearly 13%.

What we're watching: Now, the waiting game begins. The spot ETF ball's back at the SEC.

What they're saying: Appearing on CNBC this morning, Grayscale's CEO Michael Sonnenshein was clear that there's still a lot more waiting ahead. The first big milestone is the 45 days in which the SEC has to seek an appeal. Today is day one.

• "It really depends on working proactively with the SEC," Sonnenshein said. "Throughout this process, we have had — what we would think of — a professional disagreement with the SEC."

💸 Tether tapped a private bank in the Bahamas to execute dollar transfers. (Bloomberg)

🙅 OG DAO Yearn Finance tells crypto's gigantic market maker, Wintermute, to GTFO. (CoinDesk)

💔 Sources say Jump and Robinhood have broken up. (CoinDesk)

👋 Miami's Bitcoin-loving mayor dropped out of the presidential race. (Twitter)

Gary Gensler likes to make things clear, Pete writes.

• That's an admirable goal for the chairman of the country's securities regulator.

Zoom in: In his highly produced, two- to three-minute "Office Hours" segments on YouTube, Gensler's team has touched on a huge range of topics. But one topic he seems to like to talk about a lot is crypto.

• There's one on staking as a service and one on crypto lending platforms. There's a segment on crypto trading platforms, another on crypto platforms and securities laws, and a separate one on the SEC and cryptocurrencies.
• There's even one on using caution with celebrity endorsements of investment products, which happened to drop the same day the SEC slapped Kim Kardashian for unlawfully touting a crypto security.

Between the lines: Most segments share a theme: how nearly everything crypto does clearly runs afoul of securities laws.

The bottom line: Transparency is always a positive thing. But be wary of opinions presented as incontrovertible facts — yes, even from the SEC commissioner.

• As we've learned, sometimes other people in authority have different opinions.