As U.S. regulators remain averse of a first spot Bitcoin exchange-traded fund (ETF), asset management firms are stepping up and fight.
In a Q&A, Chief Legal Officer at asset manager Grayscale, Craig Salm, discussed the firm’s lawsuit with the United States Securities and Exchanges Commission (SEC) after its application for a spot Bitcoin ETF through conversion of its Grayscale Bitcoin Trust (GBTC) got denied.
Explaining the basis for Grayscale’s case against the SEC, Salm notes that in its denial of the spot Bitcoin ETF, the SEC made a distinction between futures and spot trading for Bitcoin ETFs. This however, Grayscale argues, is not the case, as both futures and spot Bitcoin ETF prices are based on the same spot Bitcoin markets.
“To summarize, the SEC’s denial draws a distinction between Bitcoin futures ETFs and spot Bitcoin ETFs because it believes the exchange where Bitcoin futures trade – Chicago Mercantile Exchange (CME) – has regulation and surveillance sufficient to account for concerns such as fraud and manipulation. However, we believe these are distinctions without a difference in the context of Bitcoin ETF approvals because Bitcoin futures and spot Bitcoin derive their pricing from the same underlying spot Bitcoin markets. As a result, we believe that approval of Bitcoin futures ETFs, but not Bitcoin spot ETFs, is “arbitrary and capricious” and “unfair discrimination,” in violation of the Administrative Procedure Act (APA) and Securities Exchange Act of 1934 (“Exchange Act” or “‘34 Act”).”
With the decision to fight the SEC in court made, Salm is confident about his firm’s arguments, nevertheless predicts a lengthy process:
“We can’t be certain about timing, but based on how long federal litigation tends to take – including briefings, oral arguments, and a final court decision – it can typically take anywhere from twelve months to two years, but could be shorter or longer,” Salm said. “However long it takes, we believe the strength of our arguments should result in a final decision in our favor at the D.C. Circuit Court of Appeals.”
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Source: Igaming
