The ETF proposed by Grayscale has become the latest rejection of the US SEC. It joins WisdomTree, VanEck, and SkyBridge. The recent SEC decision has consequently created a lot of debates.
The SEC made an official rejection of the Grayscale proposal on the 29th of June. Grayscale first submitted a proposal to the SEC on the 19th of October 2021. The proposal sought to change Grayscale BTC Trust to spot ETF.
A new proposal, however, followed in December. But the judgment was stalled till February 2022.
The SEC Might Have Fundamental Issues with Bitcoin
The regulatory body is yet to let bitcoin spot ETFs get listed. But it has given its nod to many other products based on futures.
Grayscale made many attempts at applying to the SEC for converting its BTC Trust Funds. All such attempts were denied.
Grayscale was getting ready at a point to get approval. This was before the decision via an arrangement with Virtu and Jane Street. Grayscale BTC was going to be discounted upon conversion but it couldn’t move on without approval.
Grayscale’s lead legal official said SEC might have refused due to rules in Grayscale’s favor. Craig Salm said it would have very less to do with the law itself. The lawyer said while the SEC understands ETF, it is responding in an unfriendly way.
Investors Don’t Really Care
On the other hand, Grayscale saw this coming and made legal arrangements to confront the SEC. According to a Bloomberg report in March, Grayscale was preparing to sue the Commission.
When it applied for the BTC ETF change, it also planned for possible outcomes. Grayscale CEO made this known while citing the Administrative Procedure Act (APA). The Act is the greatest weakness of the Commission.
Not long after the result was announced, Grayscale filed a suit against the Commission. The suit was taken before the US Court of Appeal in the DC Circuit. Grayscale’s case is that approving BTC Futures ETFs and rejecting spots violates the APA.
An Unpopular Move
The SEC decision has raised a lot of dust in the crypto space. SkyBridge Capital founder, Scaramucci, sarcastically said SEC now means Stop Economic Creativity. SkyBridge also got rejected by the SEC after many delays
SkyBridge applied for a spot BTC ETF in January 2022 as First Trust SkyBridge. The decision followed SkyBridge’s initial application to the NYSE for BTC ETF in March 2021.
According to SEC, the products didn’t meet the expected standard of listing financial products. This, it says, is according to its rules of practice.
The SEC is also in a lawsuit with Ripple for more than a year.