Effort to Reverse Bitcoin Fund Rejection Wins Broad Crypto Industry Support
Three trade groups representing a wide swath of the crypto industry filed an amicus brief supporting a Grayscale Investments lawsuit against the Securities and Exchange Commission (SEC) for rejecting the firm’s proposal for a spot bitcoin (BTC) exchange-traded fund.
In the brief submitted Tuesday to the U.S. Court of Appeals for the District of Columbia Circuit, the Blockchain Association, the Chamber of Digital Commerce and Coin Center noted that the SEC had “categorically denied every proposal” to list ETFs that hold bitcoin, despite approving multiple ETPs that hold bitcoin derivatives (specifically, futures contracts).
“The Commission’s ‘thumb on the scale’ approach does not withstand scrutiny,” the groups said, calling spot ETFs “ideally suited” for investors who desire exposure to bitcoin. The groups added that the SEC had allowed “similar, riskier products to enter the market,” yet ETFs “plainly satisfy regulatory requirements for listing on a national securities exchange.”
Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent company. Included in the separate membership lists of the Blockchain Association and the Chamber of Digital Commerce are Blockchain Capital, Chainalysis, Goldman Sachs, Binance.US and Fidelity. Coin Center is an educational and research institution focused on public policy issues related to crypto.
In June, the SEC denied Grayscale’s application to convert its flagship Grayscale Bitcoin Trust (GBTC) into an ETF from a trust. Grayscale then filed a lawsuit against the regulator.
In an opening legal brief submitted last week, Grayscale called the SEC’s rejection “arbitrary, capricious, and discriminatory.”
Proponents of approving a spot bitcoin ETF have argued the product would offer a low-cost, easily accessible way for individuals and institutions to invest in bitcoin. Grayscale has argued forcefully that it is inconsistent to approve an ETF based on bitcoin futures but not allow one based on the underlying investment.
UPDATE: (Oct. 18, 2022, 0:18 UTC): Adds members of Blockchain Association and Chamber of Digital Commerce and description of Coin Center.
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