The Vice President of Legal affairs for Grayscale, Craig Salm, has recently told media that the legal team is currently bargaining with SEC on the matter of spot ETFs tied to Bitcoin. It is worth noting that after the newly appointed SEC Chief, Gary Gensler, greenlit the conditioned Bitcoin ETFs, three applicants were able to get approval from the financial regulator.
However, SEC has continued to ignore and reject all spot BTC ETFs in the country. Salm has claimed that the treatment of SEC towards spot ETF applications is capricious and arbitrary. It is worth noting that Grayscale Bitcoin trust is one of the largest Bitcoin reserves in the world, holding $38 billion worth of BTC at present.
Grayscale has Hired a Legal Assistance Team to Convince SEC
Grayscale VP for legal affairs, Craig Salm, recently told media that the financial giant hired the legal services of Davis Polk to compose a letter of protest addressed to SEC. The contents of the letter question the SEC legal experts about the violation of the Administrative Procedure Act (APA). The act requires the regulator to deal with a like situation in a similar manner.
According to Salm, by approving Bitcoin ETFs pegged to futures contracts, SEC has created a bizarre standard that treats futures contracts as a safer investment in comparison to the actual spot asset. The letter also postulates a comparison between 40 ACT for futures ETF and 33 ACT for spot ETFs drawing a similarity between the two positions and therefore questioning SEC over-treating both options differently.
Grayscale has been planning to convert its Bitcoin Trust shares $GBTC into spot ETF for a long time. The financial organization has been suffering from strict legal regulations that require accredited investors to hold their Bitcoin shares for at least six months before the public declaration. Salm claims that Bitcoin futures holders are exposed to 30% higher loss risks in comparison to spot ETF due to dependence on leverage.
Furthermore, the Grayscale management is also wary of the ETF competition coming from the European markets. During the ongoing week, as many as four new spot Bitcoin ETFs were launched in Europe. Attending a live event, Chief regulator Gary Gensler declined to comment on the matter of spot Bitcoin ETFs claiming that that matter was still under consideration at SEC.