The SEC on Wednesday rejected Grayscale Investments’ request to convert its $13.5 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. The SEC said in its ruling that it had not received answers to questions about preventing market manipulation, as well as explanations for other concerns included.
The decision to reject Grayscale’s application was made along with the decision to reject another spot Bitcoin ETF applied for by Bitwise. Like Bitwise, Grayscale applied last October, but the decision was repeatedly delayed as the SEC requested additional information and public comment.
It is worth mentioning that Grayscale only a few days ago reported in its letter to investors that it had received 11400 letters related to the proposed spot Bitcoin ETF, 99.96% of which supported the initiative to create such an ETF. Supporters argued that the product would be a low-cost and easily accessible way for individuals and institutions to invest in Bitcoin.
Optimism about the ETF’s approval increased significantly after the SEC approved several futures-based ETFs last fall, and then after two more futures ETFs were approved earlier this year under the Securities Exchange Act of 1934, to which Grayscale’s spot Bitcoin ETF was to be subject.
What does Grayscale have to say about this?
Michael Sonnenshein CEO of Grayscale informed on his Twitter that he is entering a court path with the SEC.
It is the SEC’s arbitrary and capricious actions and discriminatory treatment of issuers that necessitates taking this matter to court in the best interest of GBTC and our investors.
According to him, the SEC does not apply consistent treatment to BTC’s investment instruments, as evidenced by its rejection of GBTC’s application to convert to a spot ETF, but approves several futures funds at the same time.
If regulators feel comfortable with ETFs that hold derivatives of an asset, logically they should feel comfortable with ETFs that hold the same asset.
Meanwhile, the SEC continues to argue that GBTC conversion would not prevent fraudulent and manipulative acts and practices, and would not protect investors and the public interest.
When can we expect the dispute to be resolved?
According to James Seyffart, a Bloomberg analyst citing another litigation analyst, the trial will take between 12 and 18 months.
Interestingly, news has just surfaced about a spot Bitcoin ETF that is set to launch in July in Europe. It will be released on the Euronext exchange in Amsterdam by Jacobi Asset Managment under the ticker BCOIN (Jacobi Bitcoin ETF). However it will only be available to institutions and professional investors.