Barely an hour after seeing its bid to convert the Grayscale Bitcoin Trust to an exchange-traded fund (ETF) turned down by the U.S. Securities and Exchange Commission (SEC), Grayscale Investments has announced its plans to go to court.
The proposal is one of many other Bitcoin ETFs (over a dozen) that the SEC has rejected over the past year. However, Grayscale Investments is not having it.
Grayscale Investments To Appeal SEC’s Order
To its credit, the SEC claims that its disapproval was not solely based on whether or not bitcoin, or blockchain technology in general, has value as an innovation or an investment. The regulator once again cites its agelong reasons bothering around market manipulation concerns and investors protection.
However, Grayscale has now made good with its early-year threats of suing the regulator in the event of a rejection. According to a court filing, Grayscale is determined to have the U.S. Court of Appeals for the District of Columbia Circuit look into the SEC’s order. And the firm’s counsel is former Solicitor General Don Verrilli, one of the most prominent appellate litigators in the country.
Meanwhile, Grayscale CEO Michael Sonnenshein has expressed his displeasure about the rejection in a statement. He said in part:
“ …we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the U.S. market.”
Why Not Bitcoin ETFs?
Without a doubt, this is the umpteenth time that the SEC is reflecting Bitcoin ETFs. And for that, many believe that the regulator’s rigid stance on Bitcoin ETFs might be a witchhunt.
More so, SEC has approved other ETFs (futures-based), and they are currently trading. So, it is likely that that is the argument that Grayscale Investments will put forward.
Recall that in early June, Verrilli told reporters that once the SEC approved futures ETFs, then it means that the underlying market is reliable. At the time, Verilli explained that the SEC could only have approved bitcoin futures, after being convinced of its consistency with securities laws. Particularly, after discovering that there is little or no underlying risk of fraud and manipulation.
To date, no Bitcoin ETFs have been approved. But the outcome of this case may prove to be a major turning point.