The Securities and Exchange Commission has repeated its stance to reject Grayscale’s bid to launch a bitcoin ETF.
The SEC says such products are prone to fraud and manipulation, court records show, and reported by the Financial Times.
Grayscale claimed over the summer that the SEC was applying an unfair double standard by allowing bitcoin futures ETFs, but denying proposals for ETFs that invest in spot bitcoin.
The SEC’s first response to Grayscale’s lawsuit was that it had approved bitcoin futures ETFs because they are monitored closely by the Chicago Mercantile Exchange. Spot bitcoin ETFs, meanwhile, lack that level of federal oversight.
GRAYSCALE BID FOR SPOT BITCOIN ETF REJECTED BY SEC
Grayscale’s proposal to convert its Bitcoin Trust into an ETF was rejected by the SEC in June.
Grayscale then sued the regulator, alleging the commission was discriminating between issuers of the two types of ETFs on an “arbitrary and capricious” basis.
In October 2021, the ProShares Bitcoin Strategy ETF became the first bitcoin futures ETF.
Other bitcoin futures ETFs on the market include the $20mn Valkyrie Bitcoin Strategy ETF and the $21mn VanEck Bitcoin Strategy ETF.
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The SEC has rejected applications for bitcoin ETFs from a raft of companies, including WisdomTree, Fidelity and VanEck.
The SEC also argued that bitcoin futures ETFs and spot bitcoin ETFs should be treated differently from one another because they pose different risks for investors.
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The commission in a brief, urged the Washington, D.C., appeals court, where the case is filed, to affirm its view that it acted reasonably when rejecting Grayscale’s plans to convert its Bitcoin Trust.
FOX Business has reached out to Grayscale for comment.