Grayscale urges SEC to approve spot bitcoin ETF

A three-judge panel last week ruled that the SEC was wrong to refuse Grayscale’s proposed bitcoin exchange-traded fund without explaining its reasoning

Grayscale Investments on Tuesday urged the U.S. SEC to swiftly approve its proposed ETF that would track bitcoin, after the crypto asset manager’s court victory against the SEC.

A three-judge panel of the District of Columbia Court of Appeals in Washington last week ruled that the SEC was wrong to refuse Grayscale’s proposed bitcoin exchange-traded fund without explaining its reasoning, in a case that has been closely watched by the industry and which briefly raised the price of bitcoin around 7%.

The ruling requires the Securities and Exchange Commission to evaluate Grayscale’s application, although the SEC still has time to appeal the court’s ruling. The agency said last week that it was studying the decision.

“We hope you will agree that the best use of resources now is for the (SEC) to issue an order approving” the product, Grayscale’s law firm DavisPolk stated in a letter which was filed with the Securities and Exchange Commission on Tuesday.

A spot bitcoin exchange-traded fund would give investors exposure to the world’s biggest crypto currency without having to own it. The Securities and Exchange Commission has rejected all spot bitcoin ETF applications, saying applicants have not shown they can protect investors from market manipulation.

It has, however, approved bitcoin futures exchange-traded funds based on a market surveillance arrangement with the Chicago Mercantile Exchange, where most bitcoin futures trade. Grayscale contended the same setup should be satisfactory for its spot ETF, as both products rely on bitcoin’s underlying price.

The appeals court ruled that the Securities and Exchange Commission arbitrarily rejected Grayscale’s application because it never explained why the two arrangements were materially different.

“If any other reason could be offered in trying to differentiate” the two types of products “we are confident that it would have surfaced by now,” DavisPolk stated.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Scommerce. The information provided on Scommerce is intended for informational purposes only. Scommerce is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.