Grayscale may sue SEC over GBTC to Bitcoin ETF conversion

Grayscale Investments is considering legal action against the Securities & Exchange Commission after multiple rejections of its spot Bitcoin ETF. 

Grayscale Investments is the global leader in digitally native assets. They formed in 2013 and gained prominence by growing alongside the emerging Crypto market. They have created institutional-grade investment trusts for assets such as Bitcoin: Grayscale Bitcoin Trust (OTC: GBTC), Ethereum, Litecoin, XRP, Bitcoin Cash, and Zcash. As a leader in the industry, Grayscale has looking to create and offer an Exchange Traded Fund for crypto assets, specifically a Bitcoin ETF. Grayscale intends to convert the Bitcoin Trust they manage into exchange-traded funds. 

However, Grayscale needs approval from the SEC, and the commission has yet to sign off on the conversion. They are not the only ones. Multiple assets managers have sought approval from the SEC to create and offer Bitcoin and Crypto-only ETFs, all of which have been rejected thus far. 

Grayscale itself has submitted documents for approval numerous times. In November of 2021, Grayscale sent a letter to the SEC stating its case and outlining its grievance with the commission and its lack of approval. One of the main points is that, in the fall of 2021, the SEC approved a Bitcoin futures ETF while rejecting the entire industries’ submissions for spot ETFs.

“The commission has no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not,”

~ From the Grayscale letter to the SEC

 

Image from Grayscale Investments website

Over the last year, these actions by the SEC have led Grayscale to the precipice of legal action. Grayscale’s stance is that the SEC is illegal and arbitrary under the Administrative Procedure Act (APA). If this argument ends up in court and they receive a favorable outcome, it could open the flood gates of mainstream Bitcoin and crypto ETFs. 

It seems now Grayscale is waiting for one more opportunity for a favorable ruling from the SEC. They have until Jul. 6, 2022, to approve or again deny the conversion of the Grayscale Bitcoin Trust into a Bitcoin spot ETF. After that, the odds seem likely, a legal course of action may ensue.

In the meantime, investors can learn more and contact the SEC on behalf of Grayscale and all investors to advocate for approval of a Bitcoin ETF investment instrument. Check out this info directly from the Grayscale website:

Images from Grayscale Investments website

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