If the SEC can approve future Bitcoin ETFs, there should be no basis for rejecting Bitcoin ETFs present in Grayscale
Cryptocurrency asset management and digital currency investment firm Grayscale Investment has published a public letter to Vanessa Countryman, secretary of the US Security and Exchange Commission (SEC). The company argued that the SEC's rejection of Bitcoin ETFs is inconsistent with the Commission's previous decisions.
The SEC previously approved three Bitcoin futures ETFs, one each from VanEck, Valkyrie and ProShares. Grayscale pointed out, adding, that there is therefore no legal explanation for the recent rejection of VanEck's Bitcoin ETF spot.
The regulator “has no basis for the position that investing in the derivatives market for an asset is acceptable to investors, while investing in the asset itself is not,” Grayscale argued in the letter.
The investment firm also accused the SEC of not complying with the provisions of the Administrative Protection Act (APA), as the SEC is treating two Bitcoin ETF products differently:
“We believe that this reasoning has failed to take into account significant regulatory and competitive developments since 2017, when the Commission first considered, and denied, a national stock exchange request to list and trade shares of a cash ETP Bitcoin .”
Grayscale recommended that the SEC exclude the requirements of Section 6(5)(b) of the Exchange Act for applicants of Bitcoin ETFs.
A Bitcoin spot ETF works similarly to holding the asset. Investors can trade at the current Bitcoin price. However, a Bitcoin future ETF allows traders to speculate on the asset's future price through derivatives.
The SEC rejected VanEck's request on Nov. 12, citing that the request did not meet the requirements of the Securities Exchange Act of 1934 (Exchange Act). Grayscale filed a similar order in October, with a decision expected by the end of the year.
Prospects for Grayscale's proposal to list the GBTC as an ETF in Bitcoin Spot are not very positive in light of the recent SEC ruling on VanEck.
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