The SEC on Wednesday rejected Grayscale’s application for a spot bitcoin ETF, citing an investment manager’s failure to answer questions about concerns about market manipulation.
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Grayscale, which manages the world’s largest bitcoin fund, said it would sue the US Securities and Exchange Commission after regulators rejected its offer to turn the investment instrument into an exchange-traded fund.
The SEC on Wednesday rejected Grayscale’s application for a spot-traded bitcoin fund, citing an investment manager’s failure to answer questions about concerns about market manipulation.
The Authority is concerned that investors will not have sufficient protection under the Grayscale proposal.
Grayscale applied to make its Bitcoin Trust, known as GBTC, an ETF as early as October 2021, but the decision faced many delays. Grayscale pressured the observer to side with him, including giving people a way to send emails quickly to express their support.
Shortly after the SEC’s rejection, Grayscale filed a petition challenging the decision with the U.S. District Court of Appeal for the District of Columbia. The trial is led by Grayscale Senior Legal Strategist Donald B. Verilli Jr., a former U.S. attorney general, and a team of attorneys at Davis Polk & Wardwell.
Verilli said that the SEC “failed to apply consistent treatment to such investment instruments and therefore acted arbitrarily and capriciously in violation of the Administrative Procedure Act and the Securities Exchange Act of 1934.”
The SEC was not immediately available for comment outside normal business hours in the United States.
Grayscale argues that the SEC’s position is inconsistent in light of previous green light solutions of other bitcoin-based ETFs, including those based on futures markets and one that allows investors to break or bet against cryptocurrency.
Crypto bulls pinned their hopes on the SEC to approve the first spot bitcoin ETF in the United States, a move that would potentially open the cryptocurrency to more institutional investment.
The move to abandon Grayscale’s bitcoin ETF app adds a lot of negative news about crypto lately. Earlier this week, the struggling crypto hedge fund Three Arrows Capital collapsed into liquidation.
Bitcoin traded at $ 20,085 late on Wednesday, down 1% in the last 24 hours. Cryptocurrencies lost a total of $ 2 trillion above market value since the peak of the bubble in November 2021.
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