Grayscale files opening brief in Bitcoin ETF battle against SEC

Rallying enactment for a U.S. spot Bitcoin exchange-traded money (ETF), Digital Currency Group (DCG) CEO Barry Silbert said it is clip the SEC approved one.

The comments came arsenic Grayscale Investments, a subsidiary of DCG, filed its opening little against the securities regulator, which has continually rejected and delayed spot BTC ETF applications.

Grayscale presently operates a Bitcoin spot merchandise and had antecedently applied to person it into an ETF. In precocious June, the SEC rejected Grayscale’s application, citing concerns implicit marketplace manipulation and the relation of Tether (USDT) successful the broader crypto ecosystem.

In response, the plus managers filed a suit against the SEC, with Grayscale CEO Michael Sonnenshein saying helium was “deeply disappointed” and “vehemently disagree[d]” with the regulator’s decision.

Grayscale argues denial of Bitcoin ETF conversion was unfair

On Oct. 11, Grayscale filed its opening ineligible little astatine the U.S. Court of Appeals for the District of Columbia Circuit, challenging the SEC’s decision to cull the conversion of the Grayscale Bitcoin Trust to a spot ETF.

The little presented an statement highlighting the SEC’s unfair attraction of specified a product. It further pointed retired that the criteria utilized to pass the regulator’s determination was flawed and applied with “special harshness.”

“[The] SEC’s denial of Grayscale’s conversion of Grayscale Bitcoin Trust (GBTC) to spot Bitcoin ETF was arbitrary, capricious, and discriminatory.”

The little mentioned the SEC’s greenish airy of respective Bitcoin Futures ETFs successful 2021 and 2022 was inconsistent with its rejection of a spot ETF product. Adding, some spot and futures ETFs deduce pricing “based connected overlapping indices” and are, therefore, “subject to the same risks and protections.” 

“That stark arbitrariness cannot beryllium justified oregon reconciled with the Commission’s mandate to dainty similar cases alike. Rather, it tin beryllium lone understood arsenic a substantive judgement connected the merits of a spot Bitcoin concern — the benignant of substantive judgement that is extracurricular the Commission’s authority.”

Spot vs Futures

Spot Bitcoin ETFs run connected the existent terms of BTC, with a communal terms seizure mechanics being the mean mean terms according to (say) 5 credible exchanges. Whereas Bitcoin Futures ETFs are based connected futures trading astatine the CME.

Generally, spot products are utilized by retail players, whereas futures products thin to beryllium favored by well-capitalized organization players.

Although differences successful spot and futures prices beryllium owed to the antithetic price-driving mechanisms down each respective market, it is argued that the futures marketplace inactive derives its pricing from the underlying spot market.

The Bitcoin Futures marketplace is regulated by the Commodity Futures Trading Commission (CFTC), not the SEC.

The station Grayscale files opening little successful Bitcoin ETF conflict against SEC appeared archetypal connected CryptoSlate.