In a significant development following its court victory against the regulator, Grayscale sent a letter to the U.S. Securities and Exchange Commission (SEC) urging swift action regarding Bitcoin spot exchange-traded funds (ETFs). Given the recent court ruling, the cryptocurrency investment giant emphasized that the SEC no longer has valid grounds to deny launching a Bitcoin spot ETF.
Grayscale’s comment letter, made public on Tuesday, called upon the SEC to “move expeditiously” towards approving spot ETFs for Bitcoin, stressing that there are “no grounds” to treat them differently from futures-based ETFs. Grayscale’s letter bluntly stated that if legitimate reasons for such differentiation existed, they would have come to light during the fifteen previous Commission orders rejecting spot Bitcoin ETF filings.
The core of Grayscale’s lawsuit against the SEC revolved around the agency’s alleged favoritism towards Bitcoin futures ETFs over spot ETFs. While the SEC argued that the two markets presented distinct risks, the court found the agency “unreasonable” for disregarding the evident financial and mathematical relationship between the spot and futures markets.
Grayscale also highlighted the prolonged duration of its filing to convert its Bitcoin Trust into a spot ETF, which has exceeded the SEC’s maximum approval/denial deadline extension. The company’s initial filing was submitted on November 8, 2021, with the SEC repeatedly delaying its decision until early July 2022, when it officially denied the application. However, Grayscale’s subsequent lawsuit resulted in the vacating the disapproval order, raising questions about the SEC’s obligation to act within the necessary timeframe.
Despite the legal proceedings, Grayscale underscored that the SEC’s continued delay harms existing investors in its Grayscale Bitcoin Trust (GBTC), eager to approve a Bitcoin spot ETF. The company argued that investors overwhelmingly prefer spot ETFs over futures ETFs.
Additionally, Grayscale reminded the SEC that other recent applicants for spot ETFs are actively working to establish surveillance-sharing agreements with cryptocurrency exchange Coinbase to meet the agency’s requirements. On the other hand, Grayscale is pursuing a similar arrangement with the Chicago Mercantile Exchange (CME), asserting that this partnership alone should suffice to secure approval.
As the battle for Bitcoin spot ETF approval intensifies, Grayscale’s letter serves as a stern reminder to the SEC that the cryptocurrency industry eagerly awaits regulatory clarity, and the agency’s continued hesitance may no longer be justified in light of the recent legal developments.
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