Grayscale Prods SEC to Approve Bitcoin Spot ETF After Court Victory. Grayscale Investments, the world’s largest digital asset manager, is urging the Securities and Exchange Commission (SEC) to approve a Bitcoin spot exchange-traded fund (ETF) following a recent court ruling in its favor. The company believes that with the court victory, which determined that the Grayscale Bitcoin Trust could be considered an SEC-reporting company, the regulatory agency should now move forward with approving a Bitcoin spot ETF. This news highlights the ongoing efforts to bring cryptocurrency investment opportunities to the mainstream market, potentially opening the doors for more institutional and retail investors to participate in the Bitcoin market.
Title 1: Grayscale Urges SEC to Approve Spot Bitcoin ETF After Recent Court Win
Title 2: Lawyers Advocating for Grayscale Investments Emphasize the Need for Timely Approval of Bitcoin ETF
In a significant development for the cryptocurrency industry, Grayscale Investments, a prominent crypto asset manager, is continuing its push for the approval of a spot Bitcoin exchange-traded fund (ETF). Lawyers representing Grayscale have recently sent a letter to the Securities and Exchange Commission (SEC), urging the agency to approve the ETF in an expeditious manner. This move comes after Grayscale’s recent legal victory against the SEC in court.
Grayscale’s legal team, consisting of lawyers from Davis Polk & Wardwell and Munger Tolles & Olson, emphasized the importance of the SEC’s timely approval of the spot Bitcoin ETF. The lawyers argued that the SEC should treat the trust similarly to exchange-traded products (ETPs) that invest in Bitcoin futures contracts, citing the approval of Bitcoin futures ETFs by the SEC.
The court ruling in favor of Grayscale stated that the SEC had failed to adequately explain its rejection of the proposed Bitcoin ETF. The ruling requires the SEC to review Grayscale’s application again, providing a new opportunity for the trust to gain approval. Grayscale has consistently highlighted that its proposed ETF would rely on the same market surveillance arrangement with the Chicago Mercantile Exchange (CME) that the SEC has deemed sufficient for Bitcoin futures ETFs. The appeals court supported Grayscale’s argument, finding that the SEC had not justified the material differences between the two arrangements.
A spot Bitcoin ETF would offer mainstream investors exposure to Bitcoin without requiring them to own the cryptocurrency directly. However, the SEC has consistently denied applications for spot Bitcoin ETFs due to concerns about potential market manipulation. Grayscale’s Bitcoin Trust, which currently holds over $16 billion in assets, is the largest Bitcoin fund in existence. Unfortunately, its shares trade at a discount to the fund’s Bitcoin holdings, causing unjustified harm to investors.
Grayscale’s lawyers asserted that converting the trust to an ETF structure would alleviate this harm. They pointed out that the discount to the fund’s Bitcoin holdings briefly tightened in anticipation of the court’s ruling supporting Rule 19b-4 approval. Furthermore, the lawyers argued that U.S. investors are being forced into less efficient and more complicated product structures compared to spot Bitcoin ETFs, as evidenced by the recent inflows into Bitcoin futures ETFs following the court decision.
In addition to addressing these concerns, the letter from Grayscale’s legal team emphasized the SEC’s years-long review of the application, which has surpassed the deadlines outlined in securities law. The lawyers questioned whether the SEC’s subsequent disapproval, later vacated by the court, fulfilled its legal obligations for timely action. They stressed that the trust’s nearly one million investors deserve a fair playing field as quickly as possible and expressed Grayscale’s readiness to operate its Bitcoin Trust as an ETF.
The SEC and Grayscale both have the option to appeal the court’s decision within 45 days. If appealed, the case may go to the Supreme Court or be reheard by the entire D.C. Circuit Court. The outcome of this legal battle will have significant implications for the cryptocurrency industry, as the approval of a spot Bitcoin ETF would provide mainstream investors with greater access to the digital asset.
In conclusion, Grayscale Investments is pushing for the approval of a spot Bitcoin ETF by urging the SEC to act promptly. With recent legal victories and a compelling argument regarding the similarities between spot Bitcoin ETFs and Bitcoin futures ETFs, Grayscale is advocating for a fair playing field for its nearly one million investors. The outcome of this battle and the subsequent approval of a spot Bitcoin ETF will shape the future of cryptocurrency investment.