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SEC Rejects Bid to Turn the Largest Bitcoin Fund Into an ETF -> Grayscale Sues SEC

CNBC | Ryan Browne | Jun 29, 2022

Grayscale Suing SEC - SEC Rejects Bid to Turn the Largest Bitcoin Fund Into an ETF -> Grayscale Sues SECGrayscale, which manages the world’s largest bitcoin fund, said it would sue the U.S. Securities and Exchange Commission after regulators turned down its bid to convert the investment vehicle into an exchange-traded fund.

The SEC on Wednesday rejected Grayscale’s application for a spot bitcoin exchange-traded fund, citing a failure by the investment manager to answer questions about concerns around market manipulation.

The watchdog is concerned investors would lack sufficient protections under the Grayscale proposal.

Grayscale filed to make its Bitcoin Trust, known as GBTC, an ETF back in October 2021, but the ruling faced multiple delays. Grayscale had piled pressure on the watchdog to side with it, including by giving people a way of quickly emailing in to express their support.

See:  First Time Ever, Grayscale’s Top Crypto Investment Product is Ethereum Trust. Institutional Shift?

Soon after the SEC’s rejection, Grayscale filed a petition challenging the decision with the U.S. Court of Appeals for District of Columbia Circuit. The litigation is being led by Grayscale’s senior legal strategist Donald B. Verrilli Jr., a former U.S. solicitor general, and a team of attorneys at law firm Davis Polk & Wardwell, said:

Failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.

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