Grayscale Fires First Salvo At SEC Over Spot Bitcoin ETF Refusal

According to Grayscale, the SEC approaches spot Bitcoin ETPs with extreme severity and exceeds its statutory authority. On Tuesday, Grayscale's chief legal officer, Craig Salm, stated that if the SEC agrees with how futures contracts are valued by exchanges that allow spot market trades, it should be happy with the underlying asset.

SEC Over Bitcoin ETF Refusal

Salm argued that the allowance of futures without the approval of a spot ETF is a "distinction without a difference in the context of Bitcoin" because "CME Bitcoin futures themselves are priced under the spot Bitcoin market." The business expanded on its position in the initial brief submitted in the lawsuit.

In late June, the regulator turned down Grayscale's request to turn its flagship fund, GBTC, into an ETF. The business declared it would appeal the ruling the same day, making good on earlier threats to file a lawsuit. The argument in today's brief is that the 850,000 investors who already possess shares in the Trust would suffer because the SEC rejected GBTC's conversion.

SEC Approves Futures-Based Bitcoin ETFs

When the SEC approved the launch of futures-based Bitcoin ETFs in October of last year, many in the sector hoped that the SEC would reverse its position on spot bitcoin ETFs. Some believed it indicated the SEC was getting closer to a physically held product at the time. Those hopes were quickly dashed, though, as the SEC kept rejecting requests for a spot Bitcoin ETF, most recently on Tuesday with WisdomTree's application.

In a letter it submitted to the SEC in November of last year, when the regulator started issuing a wave of new rejections, Grayscale laid the groundwork for what would eventually become its legal case. Grayscale warned that the SEC's propensity to approve futures products without identifying them would violate the Administrative Procedures Act.