The U.S. Securities and Exchange Commission has been informed by Grayscale Investments that it has “no grounds” to object to the transformation of its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund.Grayscale’s argument that its proposed product is not materially different from bitcoin futures exchange-traded products (ETPs) that already trade in the United States was accepted by Circuit Judge Neomi Rao, who last week ordered the SEC to review its earlier rejection of the conversion in the D.C. Circuit Court of Appeals.
After the Commission has had the opportunity to fully analyze the court’s opinion in light of the record, including the reasons for rejection set forth … we believe the Commission should conclude that there are no grounds for treating the Trust differently from ETPs that invest in bitcoin futures contracts,” Grayscale’s legal team wrote in a letter to the regulator on Tuesday.
With regard to the SEC’s history of rejecting applications for spot bitcoin ETFs, Grayscale added that if there were any distinction between these and futures-based products, “it would have surfaced by now in one of the 15 Commission orders that rejected spot bitcoin Rule 19b-4 filings even after bitcoin futures ETPs began trading.”
Despite the tone of Grayscale’s letter implying that approval is now a given, last week’s court judgment compelled the SEC to examine its denial of Grayscale’s application rather than to accept it.