Grayscale Puts Further Pressure on US SEC to Approve Spot Bitcoin ETF

The world’s largest digital asset manager Grayscale is making a further push to get a spot Bitcoin ETF in the US market. Grayscale lawyers have been turning up the heat against the US SEC to approve the conversion of its $40 billion Bitcoin Trust (GBTC) to a spot Bitcoin ETF.

The exchange-traded funds (ETFs) bundle securities such as stock and commodities and allow investors to buy their shares without owing the asset directly. Currently, the US SEC has been comfortable for approving Bitcoin futures ETF. However, it shows severe discomfort for approving a spot Bitcoin ETF product.

But lawyers representing Grayscale have cited the recent approval of Teucrium bitcoin futures ETF. Further, in a letter sent to the US SEC, Grayscale’s attorneys have argued that the manner in which the securities regulator approved the Teucrium bitcoin futures ETF, it further opens the door for the spot Bitcoin ETF. The letter from Davis Pol & Wardwell reads:

“We believe that the Teucrium order confirms the fundamental point made in our November 29, 2021 letter…[w]hen it comes to approving ETPs, there is not a basis for treating spot bitcoin products differently from Bitcoin futures products”.

The SEC had approved the Teucrium bitcoin futures ETF under the Securities Exchange Act of 1933. However, it approved other futures ETF under the Investment Company Act of 1940. this change opens up the door for the approval of the spot Bitcoin ETF.

Grayscale Could File a Lawsuit against US SEC

The securities regulator is likely to take a decision on the Grayscale application ahead in July 2022. However, if the SEC proceeds to reject the Grayscale application, the digital asset manager can file a lawsuit against the regulatory agency.

In a letter last November, Grayscale has also challenged SEC’s notion of fraud and market manipulation. Grayscale said that the SEC has never been able to prove the difference in risks of market manipulation between the spot market and the futures market. The letter read:

“If anything, derivatives markets present additional opportunities for manipulation on top of spot markets, which is why the derivatives markets have an additional layer of federal regulation, to begin with”.

Grayscale further argues that both spot and futures-based Bitcoin products “face exposure to the same underlying Bitcoin market, any fraud or manipulation in the underlying market will affect both products in the same way.”

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.