During the lengthy debates, Grayscale’s lawyers noted the SEC’s inconsistent approach to crypto investment products and urged the regulator to approve a spot Bitcoin ETF promptly.
The management firm prepared a letter to the regulator after a U.S. court on August 29 granted its petition. The appellate court ordered the Commission to revisit its decision.
In June 2022, the organization filed suit against the regulator for failing to convert GBTC into an ETF. The company filed its application with the SEC to convert the product in October 2021.
“We believe the Commission has no basis to treat the trust differently from [exchange-traded products] that invest in bitcoin futures contracts,” the lawyers wrote.
Grayscale contends that the spot Bitcoin ETF will be approved because it is based on the same market-surveillance agreement as the Chicago Mercantile Exchange, which the SEC deemed sufficient for futures-based ETFs on the first cryptocurrency.
The appellate court agreed that the agency had failed to explain why these two products differ in any material way.
According to the Grayscale letter, American investors are forced to use less efficient and more complex product structures than spot Bitcoin ETFs, citing the recent inflows into futures instruments.
“We believe that nearly a million trust investors deserve a level playing field as soon as possible,” the firm said.
Analysts at JPMorgan said that the court ruling in the Grayscale case could bring the final approval of a spot Bitcoin ETF.
The event also prompted Bloomberg’s James Seyffart and Eric Balchunas to increase the likelihood of launching similar products in the United States by the end of 2023 to 75%.
Former SEC chief Jay Clayton called the inevitable approval of a spot Bitcoin ETF.