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SEC’s Bitcoin ETF denial is ‘arbitrary, capricious and discriminatory’ says Grayscale

The SEC will have to answer for its refusal – One of the two main US financial watchdogs, the Securities and Exchange Commission (SEC), persists in refusing a “spot” Bitcoin (BTC) ETF. A decision that the group Grayscale Investments consider completely unjustified. The latter has therefore just brought the case before the United States Court of Appeals.

Why accept Bitcoin derivative ETFs, but not real BTC?

Just a year ago, in October 2021, the Securities and Exchange Commission accepted the very first AND F (exchange-traded fund) of Bitcoin. The problem, the ProShares Bitcoin Strategy ETF (BITO) – and all those who will be accepted thereafter – are based on derivative products of Bitcoin. Of the futures contracts (future) which are set in dollars.

However, the SEC has systematically refused all of the “Spot” ETFs. That is to say, funds based on real bitcoins knocking and stumbling in underlying. Rejections that are all the more unacceptable for Grayscalethat its spot ETF proposal is based on the conversion of its fund Grayscale Bitcoin Trust (GBTC). The latter has however existed since – behave wellSeptember 2013!

In a communicated press release published on October 11, 2022, Grayscale calls for the end of SEC impunity, and files an opening memory given his court case against the financial regulator. Hostilities are launched in these terms:

“The brief argues that the SEC’s refusal to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was: arbitrary, capricious, and discriminatory. »

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Grayscale won’t let the SEC off the hook so easily

The Grayscale case against the Securities Commission is therefore open before the Court of Appeal of the United States of District of Columbia Tour. The investment fund specializing in crypto-assets disputes the blocking of its BTC spot ETF, rejected on June 29, 2022, by the SEC.

“In 2021 and 2022, the SEC approved several ETFs based on bitcoin futures, but repeatedly rejected ETFs that directly hold bitcoin. (…) The brief points out that Bitcoin futures contracts (future) and spot (spot) bitcoins both generate their price based on overlapping indices. So the spot price of Bitcoin in every product is subject to the same risks and protections. »

Grayscale’s memoir, therefore, denounces a “blatant arbitrariness” and exposes a “special hardness” test that the SEC applies to ETFs linked directly to Bitcoin, “and only to these”.

Grayscale also recalls that “more than 850,000 Americans” already own shares of its GBTC. The highly combative crypto investment fund explains ” wait with impatience “ the SEC’s response. Unfortunately, the latter is a great specialist in the art of kicking into touch and likes to play the clock. Grayscale, therefore, expects a legal fight of 1 to 2 years before doing makes sense to the US Securities Commission.

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John R. Zepeda

I have extensive experience working as a content writer in the areas of cryptocurrencies and finance, where I create interesting pieces that both inform and engage their audiences.

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