The world’s largest crypto asset manager Grayscale Investments has come out lashing at the U.S. Securities and Exchange Commission (SEC) for rejecting the spot Bitcoin ETF.
Grayscale is looking to convert its $12 billion Bitcoin Trust (GBTC) into a spot Bitcoin ETF. However, the SEC has turned down this proposal citing risks of fraud and market manipulation.
Grayscale said that the SEC is “capricious” and “discriminatory” in its assessment of the spot Bitcoin market as the securities regulator has allowed futures-based Bitcoin ETFs and they are exposed to similar concerns. In its lawsuit against the SEC, Grayscale argues:
“The test the SEC has applied to Bitcoin-related ETFs, and only Bitcoin-related ETFs, is flawed and has been inconsistently applied with a ‘special harshness’ to spot Bitcoin ETFs”.
Grayscale has decided to pursue legal action against the SEC and sued the securities regulator in mid-2022. The Grayscale Bitcoin Trust is currently trading at a record 25% discount in the market. This means seeking exposure to Bitcoin via Grayscale could be at just $12,500 i.e. 35% discount from the current price. this shift would also help to close the fund’s discount to the net asset value (NAV).
SEC Turns Down WisdomTree ETF
The U.S. Securities and Exchange Commission (SEC) has recently turned down the spot Bitcoin ETF proposal from WisdomTree. On Tuesday, October 11, the SEC rejected the WisdomTree proposal after rolling over the decision in March and August.
The SEC has cited the same old reason for fraud risks and market manipulation in the spot Bitcoin market. The Bitcoin community has been eagerly waiting on the sidelines for a spot Bitcoin ETF which would drive institutional adoption. On the other hand, the SEC has refused to budge.
However, institutions have continued to make a move and trying to seek exposure to BTC through other means. It looks like it might take another bull run for the SEC to be ok with having a spot Bitcoin ETF.
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