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June 30, 2022

Grayscale Sues the SEC After the Rejection of a Bitcoin ETF

In response to the SEC’s denial of its application to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin Spot Exchange-Traded Fund, leading asset management company Grayscale Investments has launched a lawsuit (ETF).

Grayscale’s plan to transform its $40 billion Bitcoin Trust into a spot ETF was rejected by the SEC on Wednesday because it didn’t fulfill typical consumer criteria, including those “intended to prevent fraudulent and manipulative actions and practices.”

As a result of this argument, the regulator stated the New York Stock Exchange (NYSE Arca) does not have an arrangement with another licensed platform that handles “substantial” volumes of BTC trading to monitor the price of bitcoin. If the NYSE Arca had accepted GBTC, it would have been listed on the NYSE Arca.

U.S. investors may not be adequately protected from market manipulation and volatility by the Grayscale Bitcoin Spot ETF plan.

Asset management business stated it disagrees with SEC’s decision, adding that the SEC is failing to provide equitable treatment to Bitcoin investment vehicles, as it has done to many Bitcoin Spot ETFs, shortly after the SEC rejected the application.

Only a few Bitcoin Futures ETF applications have been approved by the Securities and Exchange Commission in the past.

So, Grayscale has petitioned the US Court of Appeals in Washington, DC, to have its judgment reviewed. In a statement, the business said it will keep working to turn its GBTC into an exchange-traded fund (ETF).

On the topic, Grayscale Investment’s CEO, Michael Sonnenshein, said that the business is ready to “use all of the firm’s resources to fight for our clients and the equal regulatory treatment of bitcoin investment vehicles.”

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After Jane Street and Virtu Financial (VIRT) agreed to be “approved participants” in Grayscale’s plan on June 27, Grayscale signed its own agreements.