The Securities and Exchange Commission has reiterated that it will not approve Grayscale’s request for an exchange-traded fund for bitcoin (ETF).
The federal regulator reaffirmed its opinion that such products are vulnerable to manipulation and fraud. In June of last year, it had already denied Grayscale’s request to turn its Bitcoin Trust into an ETF.
According to Grayscale, the SEC unfairly targets ETFs that invest in spot Bitcoin. Following the denial, Grayscale filed a lawsuit against the SEC. It said that by permitting just Bitcoin futures ETFs on the market, the regulator was using an unreasonable double standard.
According to Grayscale, the SEC broke both the 1934 Securities Exchange Act and the Administrative Procedure Act. Furthermore, it charged that the commission made “arbitrary and capricious” distinctions between the two types of ETF issuers. Grayscale continued, saying that by establishing this “uneven playing ground,” the SEC unfairly disadvantages its shareholders.
The SEC also reiterated its justification for authorizing Bitcoin futures ETFs in its reply brief. Spot Bitcoin ETFs are not subject to any kind of government regulation, but Bitcoin futures ETFs are constantly watched by the Chicago Mercantile Exchange. Because each form of cryptocurrency product posed different dangers to investors, the SEC declared that it would make a distinction between them.
