Digital asset manager Grayscale has filed an opening statement against the U.S. Securities and Exchange Commission (SEC), challenging their decision to deny Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into a bitcoin spot trading (ETF) opening.
On October 11, the world’s largest digital asset manager filed an opening lawsuit with the U.S. Court of Appeals for the District of Columbia, stating that the SEC’s response was “arbitrary, capricious and discriminatory.”
Grayscale states that the Securities and Exchange Commission (SEC) is dealing with spot bitcoin (
) exchange-traded products (ETPs) are “particularly violent” and they do so “beyond their legal authority”.
Grayscale lawyers argue that many bitcoin futures ETFs previously approved by the Securities and Exchange Commission (SEC) base their prices on the same indices as bitcoin spot ETFs.
They stated that the SEC cannot reasonably conclude that Bitcoin futures ETFs do not carry “the same risks in the same market” as Bitcoin spot ETFs, adding:
“While bitcoin may be a relatively new asset, the legal issue here is simple. The Commission has violated the most basic requirements of the APA by failing to justify its vastly different treatment of bitcoin futures ETP and bitcoin ETP identification.”
Shades of Gray also argued that the SEC’s “significant market test”—a test that assesses whether an exchange’s proposal to list an ETP program is “intended to prevent fraudulent and manipulative activities and practices”—is “imperfect” and that the SEC has “set the standards.” high.” cannot be satisfied.
Grayscale lawyers also noted that this important market test only applies to Bitcoin-related ETPs, leading them to believe they have been discriminated against.
Shades of Gray also claimed that the SEC’s decision “harms the 850,000 investors who own shares in the trust”:
“Given that the committee did not approve the trust’s trading as an ETP on an exchange, the value of the shares cannot exactly match the value of the trust’s underlying bitcoin assets, depriving shareholders of their trust of billions of dollars.”
“There is simply no justification for continuing to cause such serious harm to an investor,” the note said.
Related: Greyscale Legal Says Bitcoin ETF Lawsuit Could Take Two Years
The application to the US Court of Appeals comes after the Securities and Exchange Commission (SEC) formally rejected Grayscale’s application to convert GBTC to bitcoin ETF on June 29.
That same day, Grayscale initiated the lawsuit by filing a “petition for review.”
According to Grayscale, the Securities and Exchange Commission (SEC) has until November 9 to submit the summary. Greytoner then provides a summary of the response on 30 November before the parties submit a final summary on 21 December.
As of March 2022, Grayscale had $26.4 billion in assets under management.