The U.S. Securities and Exchange Commission (SEC) has unceremoniously turned down a new bitcoin-based exchange-traded fund (ETF) application submitted by bitcoin evangelist Grayscale. Now, the latter is suing the agency over its decision.
The SEC Is Being Sued by Grayscale
The SEC has long posed problems for companies looking to have bitcoin-based ETFs become a thing. Just ask firms like Van Eck. They can tell you firsthand that the process of getting an application approved is not easy, and nine times out of ten, the document is thrown back in one’s face before it’s even properly considered or read.
At the same time, the SEC has approved new ETFs based on bitcoin futures in the past, the first coming by way of a company called Pro Shares last year. While many were pleased with the idea that this was going to occur, others were critical, claiming that bitcoin futures offered substandard technology when compared with that of spot trading based on real, physical bitcoins.
Nevertheless, the move appears to have been a positive one that tantalized everyone’s crypto taste buds, and this is the argument Grayscale is using against the SEC. It says if the agency has no problem approving those ETFs, it shouldn’t have a problem approving one that is based on the real bitcoins everyone has come to love and request.
In a press release, Michael Sonnenshein – the CEO of Grayscale – announced:
Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation, and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot bitcoin ETFs from coming to the U.S. market. We will continue to leverage the full resources of the firm to advocate for our investors and the equitable regulatory treatment of bitcoin investment vehicles.
Donald B. Verrilli, Jr. – the senior legal strategist for Grayscale and a former U.S. solicitor general – also threw his two cents into the mix, mentioning:
The SEC is failing to apply consistent treatment to similar investment vehicles and is therefore acting arbitrarily and capriciously. There is a compelling, common-sense argument here, and we look forward to resolving this matter productively and expeditiously.
Trying to Keep Traders Safe
The SEC has not given any specific details regarding the upcoming case, though the agency has commented that it was put in power to make the best decisions for investors and keep them safe. Given that crypto is crashing at this time and proving more unpredictable than ever, the organization says it cannot take any chances that traders will potentially lose all their money through such an outlet.
Grayscale says that its product will allow individuals to transfer their bitcoin funds into spot ETFs and permit the company to maintain its competitive edge in the crypto industry.