Grayscale, the digital asset manager, has filed a letter in its lawsuit against the US Securities and Exchange Commission (SEC) over the rejection of its spot bitcoin exchange-traded fund (ETF). The letter, dated July 10, highlights the listing of the Volatility Shares Trust, a leveraged bitcoin ETF, as a potential precedent to advance Grayscale's case. While the SEC has approved ETFs tied to BTC futures, it has not yet approved any spot crypto ETFs.
Grayscale's legal team argues that volatile stock ETFs, such as the Volatility Shares Trust, expose investors to riskier products compared to BTC futures ETFs. By pointing out this distinction, Grayscale suggests that it opens up a potential path for SEC approval of their spot bitcoin ETF offering. The asset manager filed a legal challenge with the SEC in June 2022 after its application to convert the Grayscale Bitcoin Trust into a spot Bitcoin ETF was rejected.
The letter asserts that the SEC's approval of leveraged bitcoin futures exchange-traded products (ETPs) demonstrates arbitrary differentiation between spot Bitcoin ETPs and Bitcoin futures. Grayscale believes that spot Bitcoin ETPs face more exposure to the Bitcoin market and argues for equal treatment of Bitcoin- based ETPs. Grayscale contends that allowing proposed spot Bitcoin ETPs, like their own, to begin trading would eliminate the unequal treatment by the SEC.
Several companies, including BlackRock, the world's largest asset management company, and ARK Investment Management, have submitted spot crypto ETF applications to the SEC. However, SEC officials have claimed that the filings were not sufficiently clear and comprehensive . As a result, some applications were refiled to include cryptocurrency exchange Coinbase as a monitoring partner, addressing the SEC's concerns raised in the June report.
