Grayscale is a leader in institutional bitcoin investing. At the end of June 2022, the company filed an application with the SEC for a Bitcoin ETF. But the request was rejected by an American stock exchange official. Grayscale has started legal proceedings to challenge the decision. The company tells us that the SEC has finally responded.
Grayscale vs. SEC: Why is Bitcoin spot trading bothersome?
The SEC is the American authority that regulates stock market transactions, hence its nickname as the stock market police. We are well aware of their opposition to Bitcoin trading on the American stock exchange. On June 29, Grayscale wanted to become a Bitcoin ETF. The cryptocurrency giant filed a request with the stock market cop to convert his Bitcoin trust into an ETF. But the SEC denied the request.
The SEC then gave several reasons related to the security and monitoring of bitcoin transactions. The organization believed that Grayscale had not provided sufficient assurances regarding the receipt of funds and the detection of fraud. Immediately following this denial, Grayscale commenced litigation and filed for review. The first response from the SEC came on 10 December. We learned from The Block newspaper that the SEC has filed its first legal filing. It comes two months after Greyscale, which was filed in court on October 11.
For Grayscale, this rejection is not explained, as other ETFs are already authorized by the SEC such as ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF.
The consequences of rejecting the SEC
The Grayscale Bitcoin trust has nearly $12 billion and manages funds for 850,000 clients. If the trust becomes a spot Bitcoin exchange-traded fund, about $4.5 billion will be unlocked. At the same time, it would force Greyscale to comply with stricter regulations.
Conclusion
The Grayscale vs. SEC case has just begun. Maybe the Bend company will finally be the stock market policeman. He is fiercely opposed to spot Bitcoin trading on the exchange. It would be a blow to lose to Greyscale. Remember that the Ripple vs SEC case may end in favor of the crypto business.
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