Lawyers representing Grayscale Investments have urged the Securities and Exchange Commission (SEC) to promptly approve a spot Bitcoin exchange-traded fund (ETF) following a recent court ruling in favor of Grayscale. The U.S. Court of Appeals for the D.C. Circuit had ruled that the SEC was wrong in rejecting Grayscale’s proposed Bitcoin ETF without providing adequate reasoning, requiring the SEC to review the application again.
In their letter to the SEC, the lawyers argued that there are no grounds for treating Grayscale’s Bitcoin Trust differently from Bitcoin futures ETFs that the SEC has already approved. Grayscale has maintained that its spot Bitcoin ETF should be approved because it relies on the same market surveillance arrangement with the Chicago Mercantile Exchange (CME) that the SEC has deemed sufficient for Bitcoin futures ETFs.
The letter also highlighted that Grayscale’s Bitcoin Trust, which is the largest Bitcoin fund with over $16 billion in assets, trades at a discount to its Bitcoin holdings, causing “unjustified harm” to investors. The lawyers contended that this harm could be avoided if the trust converted to an ETF structure.
Furthermore, the lawyers noted that U.S. investors are being directed towards “less efficient and more complicated product structures” than spot Bitcoin ETFs, and they pointed to increased inflows into Bitcoin futures ETFs following the court decision.
Grayscale’s lawyers emphasized that the SEC’s review of the Bitcoin ETF application has exceeded the deadlines outlined in securities law and questioned whether the SEC’s disapproval, later vacated by the court, fulfilled its legal obligations for timely action.
The SEC and Grayscale have 45 days to appeal the court’s decision, and the case could potentially go to the Supreme Court or be reheard by the entire D.C. Circuit Court if appealed. Grayscale expressed its readiness to operate its Bitcoin Trust as an ETF.
By FCCT Editorial Team
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