Grayscale sues SEC over refusal to convert GBTC into an ETF

Grayscale Investments has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) after the regulator rejected its application to convert the GBTC trust into a биткоин-ETF.

We’ve filed a lawsuit against the SEC. $GBTC

— Sonnenshein (@Sonnenshein) June 30, 2022

The regulator justified the verdict as failing to meet the requirements for “preventing fraudulent and manipulative acts […], as well as protecting investors and the public interest.”

Earlier the company stated that the SEC’s willingness to approve a futures-based Bitcoin ETF, while rejecting applications based on its spot version may violate the law under the Administrative Procedure Act.

“Futures Bitcoin-ETP under the Investment Company Act of 1940 and spot Bitcoin-ETP, which do not require such registration, are alike in all material respects. However, relying on the denial order [VanEck’s] from November 12, 2021, the Commission treats them differently,” the letter stated.

If the SEC did not identify market manipulation in the futures market, the company said at the time, one could conclude that the spot market likewise meets this criterion.

“We are deeply disappointed and strongly disagree with the Commission’s decision to continue prohibiting spot Bitcoin ETFs from entering the U.S. market,” the Grayscale press release said after the SEC’s decision.

CEO Michael Sonnenshein vowed to “use all of the company’s resources to protect investors’ interests and ensure fair regulation of investment instruments in the first cryptocurrency.”

The head of the firm first allowed this possibility in March 2022.

Grayscale noted that during the SEC’s review of converting GBTC into an ETF, 99.9% of those who left one of the 11 400 comments supported it. supported 99.9%.

As noted, the SEC has not yet approved any applications to launch a spot Bitcoin ETF. not approved any such filing for launching a spot Bitcoin ETF.

Grayscale Investments applied to convert a digital-gold-backed trust into a spot Bitcoin ETF on October 19, 2021.

On December 17 the SEC deferred a decision on Grayscale Investments’ application. In February the Commission took the same step again.

Earlier, the GBTC discount exceeded 34%.

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