Grayscale Takes Legal Action Against SEC Following Rejection of Its Bitcoin ETF

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Grayscale Takes Legal Action Against SEC Following Rejection of Its Bitcoin ETF By Hannah Perez

The largest crypto investment fund manager sued the SEC after the agency formally rejected its request to transform GBTC into a physical Bitcoin ETF.


  • The SEC officially rejected Grayscale’s ETF application.
  • Grayscale requested to convert his Bitcoin (GBTC) fund into a spot ETF.
  • One more rejection: the wait continues for a first Bitcoin ETF in the US.

Just like he promised he would, Grayscale Investments is suing the United States Securities and Exchange Commission (SEC) after the agency rejected its ETF application from Bitcoin.

The US regulator on Wednesday issued an official response to the request for grayscale to convert your investment vehicle Grayscale Bitcoin Trust (GBTC) in an exchange-traded fund (ETF) of Bitcoin cash. the SEC rejection the proposal arguing that the firm had been unable to address several of his concerns, including preventing market manipulation.

In addition, he cited concerns about the role of Tether (USDT) in the ecosystem Bitcoin and the lack of a shared surveillance agreement between a “regulated market of significant size” and cryptocurrency exchanges, according to picked up CoinDesk.

Grayscale sues the SEC

The giant digital asset manager had stated its intentions to convert its reputed GBTC fund into a Bitcoin at the beginning of last year. Later that year, in October, the company submitted an official application for the product launch. Nevertheless, the decision was delayed several times because the SEC requested additional information and public comment. The deadline for the regulator to give a response was July 6.

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In a Press release of Wednesday, grayscale informed that he was presenting a petition for review before the Court of Appeals of the US District of Columbia Circuit, challenging the SEC’s decision to deny conversion of GBTC to an ETF. In accordance with CoinDeskthe lawsuit came just hours after the federal agency’s response.

Donald B. Verrilli Jr., who recently joined the legal team at grayscale and previously served as US Attorney General, noted in the notice:

As Grayscale and the team at Davis Polk & Wardwell have pointed out, the SEC is not applying consistent treatment to similar investment vehicles and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and the Stock Exchange Act of 1934.

grayscale he also cited in his statement the broad support his ETF plan had received among investors. The firm had run a campaign in which more than 11,400 investor petitions were submitted to the SEC, of ​​which 99% were in favor of the fund’s transition to an ETF. Bitcoin.

Another rejection for a Bitcoin ETF

The SEC’s response is not new and adds to the list of ETF rejections from Bitcoin spot, also called physical. To date, the regulator has only approved futures exchange-traded funds Bitcointhat is, based on the derivatives market and not on the cryptocurrency itself.

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The president of the SEC, Gary Gensler, has also insisted that the agency still has too many concerns to give the green light to an investment product with these characteristics and, in this sense, has been consistent in wanting to see greater supervision of the cryptocurrency exchanges before approving a cryptocurrency ETF Bitcoin cash.

About, grayscale has argued forcefully that it is inconsistent to approve an ETF based on futures of Bitcoin but don’t allow one based on the underlying investment. as you remember CoinDeskVerrilli, a senior legal strategist at the firm, said in early June that the SEC’s approval of futures ETFs indicates that the underlying market should be considered reliable.

There is a compelling and common sense argument here, and we hope to resolve this matter productively and expeditiously.he added in today’s statement.

grayscale He had already announced that he would take legal action against the SEC if his request was rejected. this very week, CEO Michael Sonnenshein said that the company was preparing “for all possible post-failure scenarios”.

It should be noted that plans to convert GBTC into an ETF are particularly important to the fund manager, as it has seen its main investment fund Bitcoin quoted with discounts of more than 30% in recent months.

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Article by Hannah Estefanía Pérez / DailyBitcoin

Picture of Depositphotos

WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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