Grayscale is suing the SEC
The U.S regulatory authority denies the crypto investment giant’s Bitcoin ETF application
On Wednesday, the Securities Exchange Commission rejected an application from Grayscale Investments - the crypto asset manager running the world’s largest Bitcoin fund, to convert its Grayscale Bitcoin Trust (GBTC) to an ETF. Grayscale has been attempting the switch since April of last year.
ETF is a type of investment vehicle that provides indirect exposure to an asset without the need to own and store the asset itself.
In its ruling, SEC stated that the Grayscale spot ETF application did not do enough to protect investors from “fraudulent and manipulative acts and practices”.
After the ruling, Grayscale CEO Michael Sonnenshein announced on twitter that they are taking legal action.
In a statement released to investors, the company stated that they are filing a petition in the Columbia District Court of Appeals to review the ruling. The investment firm also added that the SEC is discriminating against them by approving Bitcoin Future ETF’s and denying BTC spot ETF’s like the GBTC.
“The SEC is failing to apply consistent treatment to Bitcoin investment vehicles as evidenced by its denial of GBTC’s application for conversion to a spot ETF, but approval of several Bitcoin futures ETFs. If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold that same asset.”
Grayscale says that converting the GBTC Trust into a NYSE traded ETF would bring the fund under the perimeters of the SEC and enhance protection while unlocking $8 billion in value for investors.
A Bitcoin ETF would allow investors who find direct handling of cryptocurrencies uncomfortable, gain exposure to the asset class.
They also said that a BTC Spot ETF is “no riskier” than a BTC Futures ETF, because both the markets are affected by the price of Bitcoin.
SEC has denied several other similar Spot ETF applications since November, as they are concerned with the potential for fraud and manipulation in the markets and has indicated that they wont approve spot-based applications unless crypto exchanges are better regulated.
Following the SEC ruling, Bitcoin’s price has dropped below $20,000 and reaching as low as $18,631 on Thursday, 30th June 2022.
Analysts predict more downturn in the crypto market as ramifications of the ruling continue.