Grayscale sues SEC over spot Bitcoin ETF rejection

Grayscale Investments filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) within an hour of the markets regulator rejecting an application that would have allowed its spot Bitcoin exchange-traded fund (ETF) to trade on the New York Stock Exchange (NYSE).

See related article: Bitcoin ETF rejection could trigger Greyscale to sue the SEC

Fast facts

• The SEC rejected NYSE Arca’s application for a rule change that would have allowed it to list and trade shares in Grayscale’s spot Bitcoin ETF, citing concerns about market manipulation.

• NYSE Arca had filed an application in October that would have allowed Grayscale to convert its US$13.5 billion Grayscale Bitcoin Trust into a spot Bitcoin ETF.

• The lawsuit asks the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC order.

• “We are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot Bitcoin ETFs from coming to the U.S. market,” Grayscale CEO Michael Sonnenshein said.

• Sonnenshein, who had earlier stated his intention to sue the SEC in the event of a rejection, argues that the regulator should not differentiate between Bitcoin futures ETFs, which have received approval, and spot Bitcoin ETFs.

• Grayscale’s lawyer General Don Verrilli said, “… the SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily.”

• In its order, the U.S. markets regulator emphasized that its disapproval is not based on the evaluation of the relative investment quality of a product holding spot Bitcoin versus a product holding CME Bitcoin futures.

• It is neither an assessment of whether Bitcoin, or blockchain technology in general, has utility or value as an innovation or an investment, the SEC said.

See related article: Grayscale fancies SEC green light for Bitcoin spot ETF