Grayscale’s ETF is the latest fund to be rejected by the SEC, joining SkyBridge, VanEck, and WisdomTree. The move has sparked many debates.
The Securities and Exchange Commission (SEC) officially rejected the Grayscale Spot Bitcoin ETF proposal on June 29.
On October 19, 2021, the asset management firm submitted a proposal to convert Grayscale Bitcoin Trust (GBTC) into a bitcoin spot ETF. A new application was submitted in December, but the decision was postponed until February 2022.
The SEC May Not Like Bitcoin
The US government regulatory agency has yet to approve the list of bitcoin spot ETFs, but it has approved a number of futures-based products.
Grayscale has applied to the SEC several times to convert the Bitcoin Trust Fund into an ETF. Unfortunately, all attempts were unsuccessful.
The decision to exempt GBTC upon conversion was made through an agreement with Jane Street and Virtu to approve Grayscale prior to the decision. That system cannot proceed without approval.
Grayscale’s chief legal officer, Craig Salm, suggested that the agency’s refusal may be due to the rules in their favor rather than the law. Salm added that while Sentinel understands the concept of ETFs, it is responding to requests in an unfriendly manner.
Many investors don’t care
Grayscale, on the other hand, foresaw this outcome and planned legal preparations to face the SEC’s decision. Bloomberg reported in March that Grayscale was preparing to sue the SEC if its proposal for a spot bitcoin ETF was rejected.
The fund applied for a bitcoin ETF and planned for every possible situation. Grayscale CEO Michael Sonnenshin said that if the SEC refuses, Grayscale could sue the agency under the SEC’s fundamental weakness, the Administrative Procedure Act (APA).
Shortly after the results were released, Grayscale filed suit against the SEC’s decision in the US Court of Appeals for the District of Columbia Circuit. The point of Grayscale is that approving bitcoin futures ETFs but rejecting spot products may violate the Administrative Procedure Act.
clearly not a popular move
The decision received a large number of disagreements from the crypto community. Scaramucci, the founder of global alternative investment firm Skybridge Capital, sarcastically remarked that the US SEC “now stands for Stop Economic Creativity.”
“This is a missed opportunity for the country. We have had the mantra of leadership in financial services for over a hundred years. And the fact that the SEC is moving in a direction where Europeans are allowing cash ETFs, Canadians allowing cash ETFs just missed a huge opportunity. You know, the SEC now stands for ‘Stop Economic Creativity,’ and I think that’s a terrible thing for the country.” Scaramucci said in his interview with CNBC’s Squawk Box.
Skybridge is one of the companies rejected by the agency. After several delays, the SEC formally rejected First Trust Skybridge’s application for a spot bitcoin exchange-traded fund (ETF) in January 2022.
Skybridge made the decision in March 2021 to establish a bitcoin ETF after initially applying to the NYSE. In July and November, the SEC deferred a decision to approve or reject the proposed ETF.
Are there any specific reasons? According to the SEC, the products do not meet the standards for listing a financial product under its rules of practice or the provisions of the Exchange Act.
According to the SEC, those bitcoin-related products have shown vulnerabilities in terms of “fraudulent and manipulative acts and practices”. The SEC’s decision is to “protect investors and the public interest.”
SEC stands for “Stop Every Cryptocurrency”, especially with the number of obnoxious cryptocurrency companies working with the SEC.
In addition to the Grayscale lawsuit, the SEC is also facing the Ripple court case, which has been running for more than a year and six months after the court decided to postpone it until the end of this year, including through 2023. likely to move forward. ,