Grayscale Filed Preliminary Brief Against SEC Refusal Over Bitcoin ETF

• Grayscale opted for Legal Procedure against the SEC’s decision to reject its Application for converting its Tokens into Bitcoin ETF. 

Globally popular crypto firm manager Grayscale filed its preliminary brief against the U.S Securities Exchange Commission(SEC) opposing its decision to reject an application of Grayscale for converting Grayscale Bitcoin Trust(GBTC) into the form of spot bitcoin ETF.

GrayScale is among the top ten biggest crypto asset managers in the world. The asset manager filed its preliminary legal statement on 11 October in the District Court of Columbia Circuit, stating that SEC knocks to “arbitrary,capricious and discriminatory.” 

Grayscale informed Twitter users about the same by posting it on its personal Twitter wall. 

Grayscale reasoned that the SEC treats spot bitcoin exchange-traded products (ETPs) with “particular rigor” and is doing so “exceeding its statutory authority.”

The defending Lawyer for Grayscale justified that many Bitcoin Futures ETFs that have received approval from SEC generate their prices based on similar indices as the spot Bitcoin ETF. 

He said the U.S Securities Exchange Commission could not logically conclude that bitcoin futures ETFs do not carry “the same risk in the same market” as Spot Bitcoin ETFs adding:- “Although Bitcoin may be a relatively new asset, the legal issue here is straightforward. The Commission has violated the APA’s most basic requirements by failing to justify its vastly different treatment of Bitcoin Futures ETPs and spot Bitcoin ETPs.”

Therefore the crypto asset manager also highlighted that the SEC “critical-market test” that assesses whether the exchange proposal to list ETP was “designed to prevent fraudulent and manipulative acts and practices”- Flawed” and that the SEC “set the bar so high” which can’t easily be satisfied.

Grayscale’s lawyer noted that this kind of significant market test only applies to Bitcoin-related ETPs, which led them to believe that they have been discriminated against. 

Grayscale highlights in the court filing that from the particular decision of the SEC, “more than 850,000 are affected who have owned the shares in the organization.”   

“Given that the Commission did not approve the Trust to trade as an ETP on the Exchange, the value of its shares cannot closely track the value of the Trust’s underlying Bitcoin assets— depriving Trust shareholders of billions of dollars in value. ”     

The brief of law statement further states that “There is simply no justification for continuing to inflict such serious investor harm.” 

On 29 June, SEC rejected the application of Grayscale to convert its GBTC into Bitcoin ETFs. On 30, TheCoinRepublic reported that Grayscale took legal action challenging its decision to reject its conversion application.

Two days later defending lawyer of Grayscale mentioned that the SEC is acting arbitrarily and capriciously by failing to use consistent treatment to similar investment vehicles” and can be following a legal challenge supported by the SEC’s alleged violation of the executive Procedure Act (APA) and Securities Exchange Act (SEA).    

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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