Digital asset manager Grayscale’s lawyers have urged the U.S. Securities and Exchange Commission (SEC) to give the green light to all spot Bitcoin exchange-traded fund (ETF) applications together.
The legal counsel made the call through a comment letter submitted on Thursday. This comes at a time when the company is locked in a lawsuit against the regulator over the rejection of its spot Bitcoin ETF application.
Grayscale Calls For Spot ETF Approval
Grayscale has argued that the SEC should give the regulatory blessing to all spot Bitcoin ETF applications at the same time if it approves any.
“The SEC’s actions related to bitcoin ETFs should be done in a fair and orderly manner,” Grayscale’s Chief Legal Officer Craig Salm posited in a statement. “As a disclosure-based regulator, the SEC should not pick winners and losers.”
The SEC is currently examining applications for spot ETFs from prominent fund managers, including BlackRock, Fidelity, Ark Invest, Valkyrie, WisdomTree, and VanEck. The regulator has basically struck down all applications for more than a decade over concerns of potential fraud and manipulation.
It has also previously rejected a proposal from Grayscale to convert its flagship GBTC fund into a spot Bitcoin ETF but has approved a number of futures-based Bitcoin ETFs. The investment firm has taken the SEC to court over repeated refusals to list a spot Bitcoin ETF, saying the regulator was acting arbitrarily by failing to apply consistent treatment to similar investment vehicles.
“The SEC is already in a position to approve spot BTC ETFs based on its previous approval of Bitcoin futures ETFs. BTC’s spot and futures markets are inextricably linked (as evidenced by third-party studies showing 99% correlation),” Salm postulated.
Grayscale indicated it is more than willing to work with regulators to get its spot ETF greenlighted. “We will also take any action necessary to convert GBTC to an ETF.”
Salm added that if it’s converted to an ETF, it will return billions in value to investors, noting there’s “simply no reason” the SEC should keep GBTC investors from a spot Bitcoin ETF.
Surveillance-Sharing Agreements With Coinbase Might Not Meet SEC’s Standards
BlackRock, ARK Invest, and other asset managers have since modified their applications to address the SEC’s concerns. These firms now have Coinbase, the largest crypto exchange in the United States, as their surveillance-sharing partner.
Grayscale, however, poured cold water on the so-called surveillance-sharing agreements with Coinbase, arguing that it’s “not a new idea” and may not satisfy the SEC’s requirements.
“Without disputing the usefulness of information obtainable under a surveillance-sharing agreement with a spot bitcoin trading venue, we believe the Commission’s prior decisions have already determined that such an agreement with a venue lacking compulsory investigative authority and oversight by a comprehensive market regulator does not satisfy Section 6(b)(5) in the absence of a surveillance-sharing agreement with a market of significant size that, like the CME bitcoin futures market, the Commission deems sufficiently ‘regulated.’”
Whether the SEC’s ultimate approval of a spot Bitcoin ETF is prompted by a court order or “evolution in their position on the matter,” Salm asserted it should be done “in a way that’s fair for all investors and issuers.”
