Grayscales Has Had Enough, Sues SEC Due to Foot Dragging on Bitcoin ETF

Grayscale Investments, a large digital asset manager with listed products trading on OTC Markets, has sued the Securities and Exchange Commission (SEC) due to the agency’s refusal to approve a Bitcoin-based Exchange Traded Product (ETP) or spot Bitcoin ETF.

According to a release, Grayscale filed its first legal brief in the US Court of Appeals for the District of Columbia Circuit challenging the decision by the SEC to refuse the conversion of Grayscale Bitcoin Trust (OTCQX: GBTC) to an ETF.

The legal action is the culmination of many months of attempting to receive approval from the Commission, which has repeatedly denied Grayscale and others in an attempt to have a crypto ETF trade on an exchange. On June 29, 2022, the SEC denied Grayscale’s application to convert GBTC to a spot ETF.

The thesis for listing a crypto ETF is it will boost awareness and acceptance from the broader public. Detractors claim that a single asset ETF does not make much sense and the SEC points to allegations of manipulation, among other questions.

Grayscale claims that the SEC is being arbitrary and discriminatory in its decision while exceeding its statutory authority. The company also points to the approval of a Bitcoin futures ETF which received Commission approval, as a disparity in decision-making.

Craig Salm, Grayscale’s Chief Legal Officer, noted that more than 850,000 US citizens own GBTC, a vehicle designed to provide compliant access to the world’s most popular digital asset.

Amicus briefs in support of Grayscale are due to be filed by October 18, 2022.

Grayscale has posted a dedicated section of its website to keep interested parties appraised of the lawsuit’s progress.

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