Following the crypto asset manager’s victory in court against the agency, Grayscale Investments on Tuesday encouraged the United States Securities and Exchange Commission (SEC) to promptly approve its proposed exchange-traded fund that would track bitcoin. The fund would be called Grayscale Bitcoin Tracker ETF.
In a case that has been closely watched by the industry and which briefly boosted the price of bitcoin by nearly 7%, a three-judge panel of the District of Columbia Court of Appeals in Washington ruled last week that the SEC was wrong to reject Grayscale’s proposed bitcoin ETF without explaining its reasoning. The ruling came in response to a case in which the SEC rejected Grayscale’s proposed bitcoin ETF without explaining its reasoning.
The court’s judgment mandates that the SEC conduct an investigation into Grayscale’s application, despite the fact that the agency still has time to file an appeal against the judge’s ruling. The Securities and Exchange Commission (SEC) stated one week ago that it was analyzing the verdict.
In a letter that was sent to the SEC on Tuesday, Grayscale’s legal firm DavisPolk stated, “We hope you will agree that the best use of resources now is for the (SEC) to issue an order approving” the product. The letter was written in response to a request that was made by Grayscale.
An exchange-traded fund that tracks the spot price of bitcoin would allow investors to have exposure to the cryptocurrency market without requiring them to actually hold bitcoin. All spot bitcoin ETF applications have been turned down by the SEC on the grounds that applicants have not demonstrated that they can shield investors from being manipulated in the market.
However, it has given its approval to exchange-traded funds (ETFs) that are based on bitcoin futures because of a market monitoring arrangement it has with the Chicago Mercantile Exchange, which is where the majority of bitcoin futures trade. Since both products are dependent on the price of bitcoin’s underlying asset, Grayscale suggested that the same infrastructure should be sufficient for its spot ETF.
The court of appeals came to the conclusion that the SEC had dismissed Grayscale’s application in an arbitrary manner since the SEC never articulated why the two arrangements were significantly different from one another.
According to what DavisPolk wrote, “if there was any other reason that could be offered in an attempt to differentiate” the two different kinds of items, “we are confident that it would have surfaced by now.”
