• January 21, 2022

Grayscale Investments Questions SEC’s Decision To Discard BTC Spot ETFs

In a letter of November 29th, the SEC (Securities and Exchange Commission) of the United States has been questioned by Grayscale Investments for deciding to prohibit BTC Spot ETFs. The company has claimed that the Securities Department has no base of discriminating by permitting the investment into the market of derivatives and blocking the market of assets itself. A list of rejections has long been made by the SEC, including a VanEck offering. Although this is pointed out by Grayscale to be discriminatory, the company is also waiting for the department to approve its filing for converting the GBTC (Grayscale Bitcoin Fund) into a spot offering.

By referring to the reasons like strong interest in physically-backed merchandises, Dave LaValle (Grayscale Investments’ Global Head of ETFs) had formerly pointed out that the executives at Grayscale are of the view that the regulators should not object to ETFs (offering exposure to any asset’s spot price) if they are at ease with ETFs holding futures of the same asset. In the above-mentioned letter, the company additionally reiterated that due to Bitcoin’s status, which is not of security. Under the 1940’s Investment Company Act, no registration fundamentals have been provided for registration. Moreover, it figured out that the previous disapprovals of the regulator referred to the fraud hazards as well as market manipulation.

As per the company, it is unfair for the regulatory order to be biased against Bitcoin and the stakeholders thereof, thus violating the APA (Administrative Procedure Act). The industry of cryptocurrency has lately been demanding a Spot ETF that would be physically backed. In the recent month’s early phase, Bitwise additionally bet with Matt Hougan on spot merchandise and stated that a BTC Spot ETF is the ultimate desire of a majority of the investors in the crypto community. It expressed hope for the approval and assured to keep pursuing the target with moving toward the other ways by which the investors can be assisted to get to the additional benefits in crypto.

Nevertheless, Gary Gensler (the Chairman of the SEC) is more inclined towards Future ETFs. The respective letter moved on to discuss the reality that the market has accepted the presently trading products of Bitcoin Futures, but the Securities Department has continuously applied its ambiguous as well as discretionary division among the respective products.

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