The SEC gets sued by Grayscale as it rejected the Bitcoin Trust’s application to convert to a spot Bitcoin ETF. It is not the first time that they have rejected the application of a spot Bitcoin ETF. Even after approving multiple futures ETFs from different companies, a spot one still seems far-fetched. There is also zero clarity on what companies are doing wrong as their applications are not getting approved.
SEC gets sued by Grayscale
After just 1 hour of the rejection of its application, the Bitcoin Trust filed a lawsuit against SEC. The lawsuit called for concerns regarding market manipulation, USDT’s role in the Bitcoin ecosystem, and the lack of any agreement for information sharing between the markets and exchanges. They have requested the US Court of Appeals to review the SEC’s order. It is plausible that the decision gets overturned, and spot ETFs finally become a thing.
Grayscale was already prepared for the rejection and was ready to sue SEC over this. They have brought in Solicitor General Don Verrilli, who has quite some experience in similar cases. The company also stated that they are all about SEC’s vision of protecting investors, having efficient markets, and maintaining order. However, the SEC’s constant rejection of the spot Bitcoin ETFs doesn’t bode well with them.
Why is SEC’s logic in rejecting spot Bitcoin ETFs?
To understand this, let’s understand the difference between spot and futures ETF. We already have a lot of Bitcoin futures ETF approved by the SEC. Well, the idea is that Bitcoin futures are based on CME’s Bitcoin future product, while the spot BTC ETF is based on bitcoin’s price directly.
The SEC says that the Commodity Futures Trading Commission regulates the CME’s market, and hence they are approving the futures ETF and not spot ones. On the other hand, Bitcoin proponents believe that the price of Bitcoin futures is indirectly tied to Bitcoin’s spot price. So, it doesn’t make sense to approve one while rejecting the other.
What are your thoughts as the SEC gets sued by Grayscale over the rejection of the Bitcoin Trusts application for spot ETF? And do you think that the Securities and Exchange Commission is following the right logic in rejecting spot ETFs? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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