The world’s largest bitcoin fund is suing the SEC for rejecting crypto-ETFs
Digital currency manager Grayscale is suing the US Securities and Exchange Commission in response to the recent rejection of the company’s potential spot bitcoin exchange traded funds.
Last Wednesday, the SEC rejected Grayscales’ application to convert its bitcoin trust into a spot ETF. The company filed a lawsuit the same day.
Grayscale Bitcoin Trust, under the ticker GBTC, is the world’s largest listed bitcoin fund.
“We simply asked the SEC to keep this product to a higher standard, to provide it with greater investor protection and greater risk disclosure for investors,” Grayscale CEO Michael Sonnenshein told CNBC’s “ETF Edge” on Wednesday this week. “Conversion will unlock billions of dollars in unrealized shareholder value.”
He identified the potentially capricious treatment of the SEC, which allows bitcoin futures products to trade under specific rules and regulations, but denies spot products equal opportunities.
“The inconsistent treatment here of the SEC – which allows futures products to trade but refuses spot products to trade – is not to look at what is essentially the same exact market through a similar lens here,” Sonnenshein said. “In fact, the treatment is quite heterogeneous.”
Todd Rosenbluth from VettaFi, a finance company, joined the conversation to share his thoughts on what could change the SEC’s perspective. The Commission made a distinction between futures and spot-based products, referring to the regulations related to bitcoin futures-based ETFs.
“I want Michael [Sonnenshein] good luck in the lawsuit, but it is difficult to convince the SEC that there will be no fraud and manipulation when that is what they are clearly asking the asset managers to disprove time and time again, “said VettaFi’s head of research.
The markets in Canada, Brazil and parts of Europe are showing promise for spot bitcoin ETFs, according to Sonnenshein. Instead of bringing the potential ETF to international markets right away, the Grayscale CEO hopes to repair domestic cryptocurrency regulation.
“What we are going to see, and what we intend to see, is working proactively with the SEC and other regulators here in the United States to truly respond to the White House executive order earlier this year to engage in crypto issues and “Finally, develop regulatory frameworks that create consistent processing and develop frameworks that can actually allow companies to grow and not waste innovation here in the United States when it comes to crypto,” Sonnenshein said.
The Grayscale Bitcoin Trust traded higher on Thursday. However, it has fallen more than 50% in the last 52 weeks.
The SEC declined to comment beyond its order, which rejected Grayscale’s application.
