Grayscale Investments initiated a lawsuit against the US Securities and Exchange Commission (SEC) after the regulator rejected an application to convert a GBTC trust into a bitcoin ETF.
The regulator justified the verdict by inconsistency with the requirements for “preventing fraudulent and manipulative actions, as well as protecting investors and the public interest.”
The company has previously pointed out that the SEC's willingness to approve futures-based bitcoin ETFs while rejecting orders based on its spot variant may violate administrative procedures law.
“Bitcoin futures ETPs under the Investment Companies Act of 1940 and spot bitcoin ETPs that do not require such registration are similar to each other in all relevant respects. However, relying on the rejection order [of the application from VanEck] dated November 12, 2021, the Commission interprets them differently,” the letter stated.
If the SEC did not see market manipulation in the futures market, then it can be concluded that the spot market also satisfies this criterion to a sufficient extent, the company said at the time.
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“We are extremely disappointed and strongly disagree with the SEC’s decision to continue to ban spot Bitcoin ETFs from entering the US market,” Grayscale said in a press release following the SEC decision. The CEO of the firm, Michael Sonnenschein, promised to “use all the resources of the company to protect the interests of investors and fairly regulate investment vehicles in the first cryptocurrency.”
For the first time, the head of the company allowed such an opportunity in March 2022.
Grayscale emphasized that during the SEC review, the conversion of GBTC to ETF was supported by 99.9% of those who left one of 11,400 comments.
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Recall that the SEC has not yet approved a single application for the launch of a spot bitcoin ETF.
Grayscale Investments filed an application to convert a digital gold-based trust into a spot bitcoin ETF on October 19, 2021.
On December 17, the SEC delayed its decision on the application of Grayscale Investments. In February, the Commission took this step again.
Earlier, the GBTC discount exceeded 34%.