Grayscale is unafraid of the SEC and is willing to do whatever it takes to get its Bitcoin ETF filing approved, even if it means suing the agency itself.
In an interview for Bloomberg, Grayscale CEO Michael Sonnenshein said he was not closed to any option that would bring a Bitcoin ETF closer to reality. When asked specifically if he was willing to take legal action against the SEC, his response was clear: “I think all options are on the table,” he said, urging all investors to open more channels of communication with U.S. regulators. .
Why a Bitcoin “Spot” ETF Matters
Grayscale’s efforts to launch a spot Bitcoin ETF are not new. In 2021, the company began its journey with an application to convert its Grayscale Bitcoin Trust into a Spot Bitcoin ETF.
However, the SEC has postponed its ruling until today and the company is still on hold.
This situation of uncertainty is being felt in the markets, especially considering that no previous Bitcoin spot ETF application has been approved by the SEC to date. The Grayscale Bitcoin Trust (GBTC) is the largest fund of its kind, managing assets for more than 800,000 investors.
Lately, though, the stock price has been trading at a discount of over 20% – that is, it’s cheaper to access Bitcoin through the trust than through the asset itself… but it’s also less lucrative to sell .
GBTC USD. Source: Tradingview
So far, the SEC has only approved filings for Bitcoin futures ETF. While they may look similar to the untrained eye, in reality a Bitcoin ETF and a Bitcoin futures ETF have very different characteristics, starting with the underlying asset. The Bitcoin futures market can be more volatile than the spot market, but it is more clearly regulated.
Grayscale’s Arguments Against the SEC
Grayscale has been trying to change the SEC’s stance for a while now. Last December, Craig Salm, Grayscale’s Chief Legal Officer, said: shared posted a letter to the SEC on his social media arguing that his position could be against the law.
He claimed at the time that several of the SEC’s arguments did not apply to the context of applications for approval of a Bitcoin ETF and even made it impossible for applicants to discover the conditions under which the SEC would approve an ETF:
While the Commission may have a clear idea of the facts a national stock exchange must present to demonstrate a “reasonable chance” that an culprit would have to trade in a particular market to manipulate the ETP, while also considering the “unlikeliness” to demonstrate that trading in the ETP would have the “predominant influence” on prices in that market (…) The Commission has not explained what it has in mind. The result, whether intentional or not, is that compliance with the Section 6(b)(5) standard that the Commission applies to spot Bitcoin Rule 19b-4 applications is a matter to be assessed on a case-by-case basis. in the simple discretion of the Commission and its staff.
For now, the SEC’s decision on Grayscale’s petition is expected in July. Michael Sonnenshein called on all interested parties to communicate their views to regulators while highlighting the collaborative spirit of his agency. But when things don’t work the easy way, Grayscale isn’t afraid to try the hard way.
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