After the oral hearing in The District of Columbia Court of Appeals into his company’s case against the United States Securities and Exchange Commissions (SEC), Micheal Sonnenshein the CEO of Grayscale has shared his optimism about the firm’s case with the regulator. To him, the conversion to an ETF is the best outcome for GBTC (Grayscale Bitcoin Trust).
During the hearing, the SEC argued that Bitcoin (BTC) Futures ETFs (Exchange Traded Funds) provide better protection against market manipulation than spot ETFs as the latter trades solely on the regulated Chicago Mercantile Exchange (CME). As such, Grayscale’s reaction to the SEC filing echoed its initial brief and criticized the SEC for creating an uneven playing field for investors by approving BTC futures-based ETFs, while continuously denying spot BTC ETFs.
However, one of the presiding Judges, Neomi Rao states that Bitcoin futures and spot markets go together almost all the time. According to the Judges, the SEC has not provided sufficient evidence to explain its decision to deny Grayscale’s application.
US SEC Rejects Applications for Bitcoin ETF
Since after the fall of heavyweights such as FTX and other rug pulls in the industry that has drained investors’ funds, the SEC has been cautious with related approvals. In Fact, Grayscale’s application to convert its BTC Trust under the ticker GBTC into an ETF isn’t the only application the regulator has turned down over the past few years.
Earlier in the year, the regulator rejected applications from ETF provider 21 Shares and Cathie Wood’s Ark Investment after it said it failed to prove it could protect investors and prevent fraud. It also added that the product did not meet its obligations under Exchange Act Section 6(b)(5). The product would have been listed on the Cboe BZX Exchange had it secured the approval of the regulator.
Recall that the asset manager acquired 315,259 shares of GBTC last year amid the ongoing crisis in the digital currency ecosystem.
Markedly, the regulator has hinged all of these rejections on concerns for investors’ protection and market price manipulation as to why it’s yet to approve a US Spot Bitcoin ETF. Other applications which have met similar actions from the regulator include WisdomTree and VanEck.
