Grayscale, the world’s largest cryptocurrency investment firm, has sent a letter questioning the SEC’s decision to reject Bitcoin ETFs.
In his letter, Grayscale argued that the SEC’s refusal to approve a spot Bitcoin ETF violates federal law.
Grayscale said the SEC’s decision to approve futures-based ETFs instead of spot Bitcoin ETFs was “arbitrary and capricious”, in violation of the US Administrative Procedure Act.
On November 12, the SEC rejected VanEck’s application for a spot Bitcoin ETF on the grounds that it did not comply with the Securities Exchange Act of 1934.
Grayscale stated that he did not agree with the SEC’s rejection reasons and included the following statements in his letter:
“We believe the SEC has not adequately considered important regulatory and competitive developments since 2017, when it first considered and rejected an application to list and trade shares of a spot Bitcoin ETP.
In fact, both spot or futures ETFs are the same and both are based on the same Bitcoin pricing.
It makes sense if the SEC rejects both ETFs, but accepting one and rejecting the other is inconsistent.”
He added that investor risks are “indistinguishable” in both the Grayscale spot or futures Bitcoin ETF, adding that in this context “unfair” treatment is more likely to hurt rather than protect US investors.
Grayscale’s Bitcoin ETF Application!
Grayscale first filed with the SEC in 2017 to convert the Bitcoin Trust (GBTC) into a Bitcoin ETF.
However, Grayscale withdrew its applications after the SEC indicated that both futures and spot Bitcoin ETFs were unlikely to be approved, citing concerns about fraud and manipulation in the Bitcoin market.
Grayscale again filed in October to convert GBTC to a Bitcoin ETF after the SEC approved futures Bitcoin ETFs.
In the ongoing process, December 24 may be the decision day. However, the SEC may choose to prolong the process rather than make a decision to accept or reject.
*Not investment advice.