Breaking News: This Crypto Company Is Suing SEC Over Bitcoin ETF Application Rejection

Grayscale Investments has filed a lawsuit with the US Securities and Exchange Commission (SEC) just an hour after the regulator rejected its request to convert its flagship product, Grayscale Bitcoin Trust, into a traded (ETF).

The SEC rejected Grayscale’s request earlier on Wednesday, citing concerns about market manipulation, Tether’s role in the broader bitcoin ecosystem and the lack of an agreement to share oversight between a “regulated market of significant size” and a regulated one. exchange, following concerns the regulator has spoken out for years in rejecting further bitcoin spot ETF applications.

Grayscale is a subsidiary of CoinDesk’s parent company, Digital Currency Group.

In his filing, Grayscale is simply asking the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC’s order.

The investment firm announced earlier in 2022 that it was willing to sue the SEC in the event of a rejection, and said it would file a lawsuit over the Administrative Proceedings Act. To that end, Grayscale engaged former Attorney General Don Verrilli, who has experience with APA litigation.

“Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation — and we are deeply disappointed and strongly disagree with the SEC’s decision to ban access of Bitcoin ETFs to continue to decline the market. American market,” Grayscale CEO Michael Sonnenshein said in a statement on Wednesday.

Essentially, the company will argue that the SEC must authorize products similar to other products already on the market, in this case bitcoin futures ETFs.

Verrilli told reporters earlier in June that the SEC’s approval of futures ETFs indicates that the underlying market should be considered reliable.

“It is a place where common sense plays a very important role. You now have a situation where you have certain types of exchange-traded funds, including one that focuses on bitcoin futures, and the SEC has approved that, the SEC has given it the stamp of approval,” he stated. they determine that this approval complied with securities laws and in particular that there was not sufficient underlying risk of fraud and manipulation.”

To date, only a handful of bitcoin futures ETFs have been approved for trading. Spot bitcoin ETFs trade based on the price of bitcoin itself, while futures ETFs trade based on the price of the CME’s bitcoin futures product (which itself is linked to an index). Proponents of bitcoin ETFs argue that futures markets are always based on the underlying spot bitcoin price, while the SEC notes that the CME futures market is regulated by the Commodity Futures Trading Commission (CFTC), another federal agency.

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Thomas Estimbre
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