Tag: Grayscale

Why Grayscale’s SEC Victory Is Unlikely to Benefit Bitcoin and Crypto Markets in the Long Run

by Blockchain News

Key Points

* Grayscale’s SEC victory led to a surge in Bitcoin prices but may not offer long-term benefits.

* Market reactions to Grayscale’s moves have been inconsistent.

* Grayscale’s trusts inherently limit crypto circulation.

* Most Grayscale trusts unlikely to convert into ETFs.

* Declining trading volumes signal caution.

* Broader market implications for companies like BlackRock and Fidelity.

The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale Investments on August 29, 2023, ordering the SEC to review Grayscale’s Bitcoin ETF application. While this led to an immediate surge in Bitcoin prices, several factors suggest caution for long-term market implications.

Broader Market Implications

The court’s decision is poised to send ripples through the financial industry. Firms such as BlackRock, WisdomTree, and Fidelity, which have expressed interest in launching Bitcoin ETFs, could find the legal terrain shifting either for or against them, contingent on the SEC’s future actions and any ensuing appeals. In the wake of legal victories for Ripple XRP and Grayscale, this trend could serve as a catalyst for other companies, like Coinbase, that are currently embroiled in legal battles with the SEC. 

Market Reaction: A Historical Perspective

Grayscale initially submitted an application to transform its Grayscale Bitcoin Trust (GBTC) into an ETF in October 2021. The market’s initial response was negative, yet Bitcoin soared to a record high of $69,000 on November 10, 2021, before experiencing a 70% decline thereafter. This inconsistent market reaction suggests that the recent surge in Bitcoin and cryptocurrency prices may not be reliable indicators of sustained long-term market trends. The surge in Bitcoin prices may be a trading strategy aimed at liquidating short positions.

Grayscale’s Trusts and Crypto Circulation

Grayscale’s GBTC, launched in 2013, is the world’s largest Bitcoin fund traded over-the-counter with over $14 billion in assets under management. Grayscale’s trusts inherently limit the circulation of cryptocurrencies. These trusts are not redeemable, effectively locking up assets. Grayscale offers multiple trusts related to a variety of cryptocurrencies, including: Aave (AAVE), Algorand (ALGO), Avalanche (AVAX), Basic Attention Token (BAT), Bitcoin (BTC), Bitcoin Cash (BCH), Cardano (ADA), Chainlink (LINK), Compound (COMP), Cosmos (ATOM), Curve (CRV), Decentraland (MANA), Ethereum (ETH), Ethereum Classic (ETC), Filecoin (FIL), Horizen (ZEN), Litecoin (LTC), Livepeer (LPT), MakerDao (MKR), Polkadot (DOT), Polygon (MATIC), Solana (SOL), Stellar Lumens (XLM), Uniswap (UNI), Zcash (ZEC).

Limited Scope for ETF Conversion

While the court ruling mandates a review of Grayscale’s Bitcoin ETF application by the SEC, it does not guarantee its eventual listing. Most other cryptocurrencies under Grayscale’s management are unlikely to convert into ETFs. If the SEC allows these trusts to be redeemable, it could be detrimental due to increased circulation, especially when these assets are priced lower than market rates.

Regulatory Uncertainties

Judge Neomi Rao emphasized that the SEC’s initial denial was “arbitrary and capricious,” particularly when Bitcoin and Bitcoin futures are “closely correlated.” Both parties have 45 days to appeal, and the SEC has not yet indicated whether it will appeal the ruling. If Grayscale prevails and the SEC does not appeal, the court would specify how its decision should be executed, potentially instructing the SEC to approve the application or revisit it on other grounds.

Declining Market Volumes

The overall cryptocurrency market is exhibiting signs of fatigue, marked by a significant decline in trading volumes. Notably, the Bitcoin market is currently seeing its lowest monthly trading volumes since the historical price peak in November 2021. For instance, Binance’s Bitcoin spot trading volume plummeted from $195 billion in September 2022 to a mere $28 billion last month. This sharp decline serves as a cautionary signal for investors who may be anticipating a long-term market uplift from Grayscale’s legal victory, especially considering its potential to increase the Bitcoin supply.

Conclusion

While the immediate market reaction to Grayscale’s SEC win has been positive for Bitcoin, several factors suggest caution. From the inconsistent historical market reactions to the inherent limitations of Grayscale’s trusts and declining market volumes, the long-term benefits of this legal victory for the crypto market remain uncertain.

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Grayscale Submits Comment Letter to SEC Regarding Spot Bitcoin ETF Application

by Blockchain News

As Grayscale Investments awaits a decision from the DC Circuit in their lawsuit to convert GBTC to a spot bitcoin ETF, the legal team at Davis Polk has submitted a comment letter to GBTC’s pending 19b-4 filing. This also includes seven other spot bitcoin ETF filings with newly-proposed surveillance sharing agreements (SSAs).

The comment letter, submitted recently, encapsulates Grayscale’s rationale for why the SEC should approve all spot bitcoin ETF applications. The firm remains encouraged by the increased momentum around these filings, underscoring the continued maturation of the bitcoin spot market and reinforcing the belief that American investors should have access to spot bitcoin ETFs in the US.

Grayscale argues that the SEC is already in a position to approve spot bitcoin ETFs, given its previous approval of bitcoin futures ETFs. With third-party studies showing a 99% correlation between Bitcoin’s spot and futures markets, surveillance of the CME bitcoin futures market should suffice to protect against potential fraud or manipulation in the underlying spot bitcoin market.

While Grayscale does not view the introduction of an SSA with a spot bitcoin market as the sole solution for getting spot bitcoin ETFs approved in the US, the organization continues to support efforts that enable investors to access the crypto ecosystem. Grayscale applauds progress that brings more oversight to centralized crypto markets and commits to taking necessary action to convert GBTC to an ETF.

Grayscale emphasizes that the SEC’s actions related to bitcoin ETFs should be made in a fair and orderly manner. As a disclosure-based regulator, the SEC should provide issuers with feedback or guidance consistently and equitably, without picking winners and losers.

Grayscale believes that for the benefit of Bitcoin, the market, and investors, all spot bitcoin ETF applications should be approved simultaneously. This approach ensures American investors are protected and have access to their choice of bitcoin investment vehicles.

With nearly one million investors across all 50 states owning GBTC, Grayscale stresses that GBTC’s conversion to an ETF would return billions of dollars in value to these investors. The firm will continue to advocate for the approval of spot bitcoin ETF applications, emphasizing that there is no reason to keep GBTC investors from the spot bitcoin ETF they deserve.

Grayscale uses the term “ETF” to refer to exchange-traded investment vehicles, including those required to register under the Investment Company Act of 1940, as well as other exchange-traded products not subject to the registration requirements of the ’40 Act.

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GBTC Litigation: Fir Tree and Grayscale Reach Agreement

by Blockchain News

Fir Tree Partners, a significant shareholder of the Grayscale Bitcoin Trust (GBTC), and Grayscale Investments have reached an agreement resolving a lawsuit filed by Fir Tree in December 2022. The litigation sought documents and information from Grayscale about potential mismanagement and conflicts of interest at GBTC.

The lawsuit highlighted Fir Tree’s concerns about Grayscale’s refusal to allow redemptions despite no relevant regulatory restrictions, GBTC’s extensive conflicts of interest and lack of independent oversight, and its campaign to convert GBTC into an ETF.

Under the terms of the agreement, Grayscale has agreed to voluntarily produce certain books and records in response to Fir Tree’s demand. In return, Fir Tree has agreed to dismiss its books-and-records litigation against Grayscale.

Despite this agreement, Fir Tree expressed disappointment that Grayscale management refused to comply with Fir Tree’s information rights for months and has still failed to address concerns about GBTC’s structure and the unavailability of redemptions.

Fir Tree has proposed a simple solution for GBTC, suggesting that Grayscale permit redemptions of outstanding GBTC shares so that shareholders may recover some portion of their investment. This proposal has been repeatedly rejected by Grayscale over the last eight months.

In March 2023, Fir Tree proposed an alternative solution: that Grayscale conduct a tender offer for a meaningful percentage of outstanding GBTC shares. This proposal was also rejected by Grayscale and DCG.

Fir Tree believes that a tender offer could unlock significant value for GBTC shareholders, DCG, and Genesis creditors. For example, if Grayscale were to conduct a tender offer for 20% of shares outstanding at 94% of NAV, it could potentially unlock $3.6 billion in immediate value for GBTC shareholders who participate in the tender offer.

Fir Tree urges Grayscale to act in the best interests of all GBTC shareholders and finally commit to a long-overdue tender offer to unlock billions in immediate value for all shareholders who participate in a tender.

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SEC Considers Filecoin a Security, Grayscale Disagrees

by Blockchain News

In a recent press release, Grayscale Investments, the world’s largest digital currency asset manager, announced it has received a comment letter from the U.S. Securities and Exchange Commission (SEC). According to the SEC, Grayscale’s Filecoin Trust’s underlying asset, Filecoin (FIL), should be classified as a security under federal securities laws. The regulatory body’s viewpoint has sparked a dispute, as Grayscale holds a differing opinion on the matter.

The SEC’s contention is that if Filecoin is considered a security, Grayscale’s Filecoin Trust would correspondingly qualify as an investment company under the Investment Company Act of 1940. Consequently, the SEC has requested that Grayscale promptly withdraws the registration statement it filed on April 14, 2023, for the Grayscale Filecoin Trust under Section 12(g) of the Securities Exchange Act of 1934.

Contrarily, Grayscale Investments believes that Filecoin does not meet the definition of security under federal securities laws. The company plans to respond expeditiously to the SEC, defending its position with a detailed legal explanation.

The outcome of this disagreement is uncertain, and much depends on whether Grayscale’s arguments can persuade the SEC. If the SEC stands firm in its belief that Filecoin is a security, Grayscale may be forced to seek alternative accommodations allowing the Trust to register under the Investment Company Act of 1940. Another potential, albeit drastic, alternative could involve dissolving the Trust altogether.

The stakes are high for both Grayscale and the broader cryptocurrency market. The SEC’s final decision may significantly impact the regulatory framework governing digital assets. 

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Grayscale CEO Calls on SEC to Protect Investors

by Blockchain News

Grayscale Investments’ CEO Michael Sonnenshein has called on the United States Securities and Exchange Commission (SEC) to protect Grayscale investors by returning the true asset value to them. In a recent interview on the popular podcast “What Bitcoin Did” hosted by Peter McCormack, Sonnenshein stated that he “can’t imagine” why the SEC “wouldn’t want” to protect Grayscale investors by approving the Grayscale Bitcoin Trust (GBTC) as a spot Bitcoin exchange-traded fund (ETF).

Sonnenshein explained that the SEC acted arbitrarily by denying approval for GBTC to be a spot Bitcoin ETF while approving Bitcoin Futures ETFs. He added that the SEC violated the administrative procedures act, which ensures that the regulator doesn’t show “favoritism” or act “arbitrarily.” According to Sonnenshein, Grayscale is currently suing the SEC over the denial of its initial application, and a decision on the case could be reached by fall 2023.

If GBTC were approved as a spot Bitcoin ETF, there is a “couple billion dollars” of capital that would immediately go back into investors’ pockets, on an “overnight basis,” as the fund would “bleed back” up to its net asset value (NAV). Sonnenshein explained that this is due to GBTC currently trading at a discount to its NAV, but if it were to convert to an ETF, there would be an “arbitraged mechanism” embedded, and there would no longer be a discount or a premium.

Grayscale has over a million investor accounts, with investors worldwide counting on the firm to “do the right thing for them.” Sonnenshein “can’t imagine” why the SEC wouldn’t want to “protect investors” and “return that value” to them. He added that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval.

This comes after the SEC filed a 73-page brief with the U.S. Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its $12 billion Bitcoin Trust into a spot-based Bitcoin ETF in June 2022. The SEC based its decision on findings that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. The agency had made similar findings in several earlier applications to create spot-based Bitcoin ETFs.

Grayscale is a digital currency investment firm that offers a range of investment products, including the Grayscale Bitcoin Trust, which is designed to provide investors with exposure to the price of Bitcoin without the challenges of buying, storing, and safekeeping Bitcoin directly. The trust is listed on the OTCQX market and is available to both accredited and non-accredited investors. GBTC was launched in 2013, and as of January 2022, it held over $30 billion in assets under management. Grayscale’s Bitcoin Trust is one of the most popular ways for investors to gain exposure to Bitcoin, and the firm has been at the forefront of the movement to bring Bitcoin to the mainstream.

The SEC has been hesitant to approve Bitcoin ETFs, citing concerns about fraud, manipulation, and the lack of regulation in the cryptocurrency market. In the past, the SEC has rejected several proposals for Bitcoin ETFs, citing concerns about market manipulation and insufficient investor protection. However, the agency has recently shown a more favorable attitude toward Bitcoin, with several Bitcoin Futures ETFs receiving approval.

In the case of Grayscale’s GBTC, the SEC has raised concerns about the trust’s structure and the potential for market manipulation. Grayscale’s proposal to convert GBTC into a spot-based Bitcoin ETF was denied in June 2022, with the SEC citing concerns about the lack of regulation in the Bitcoin market and the potential for market manipulation.

Grayscale has challenged the SEC’s decision, arguing that the agency acted arbitrarily and violated the administrative procedures act. Grayscale’s CEO, Michael Sonnenshein, has been vocal in his criticism of the SEC’s decision, arguing that it has hurt investors by preventing them from realizing the true value of their investment in GBTC.

The case is currently making its way through the U.S. Court of Appeals for the District of Columbia, and a decision is expected by fall 2023. If Grayscale is successful in its challenge, it could pave the way for other Bitcoin ETFs to be approved, opening up a new avenue for investors to gain exposure to Bitcoin.

Overall, the Grayscale-SEC dispute highlights the challenges facing regulators as they try to balance investor protection with the need to foster innovation in the cryptocurrency market. As the market for digital assets continues to grow, it is likely that we will see more clashes between regulators and industry participants as they try to navigate this rapidly evolving landscape.

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Grayscale CEO challenges SEC’s denial of application

by Blockchain News

Michael Sonnenshein, CEO of Grayscale Investments, stated in a recent interview that he “can’t imagine” why the United States Securities and Exchange Commission (SEC) “wouldn’t want” to protect Grayscale investors and return the true asset value to them. Sonnenshein made this statement in response to a question regarding why the SEC “wouldn’t want” to protect Grayscale investors.

Sonnenshein explained that the SEC “violated the administrative procedures act” by denying approval for the Grayscale Bitcoin Trust (GBTC) to be a spot Bitcoin (BTC) exchange-traded fund (ETF), in June 2022, during an interview that took place on February 25 on What Bitcoin Did, a popular podcast that is hosted by Peter McCormack. The podcast is called What Bitcoin Did.

He stated that this act ensures that the regulator does not show “favoritism” or act “arbitrarily,” adding that the SEC acted “arbitrarily” by approving Bitcoin Futures ETFs while rejecting “GBTC’s conversion.” He explained that this act ensures that the regulator does not show “favoritism” or act “arbitrarily.”

Grayscale Investments saw the SEC’s approval of the first Bitcoin exchange-traded funds (ETFs) as “a indication” that the SEC was “changing its approach about Bitcoin,” according to Sonnenshein’s observation.

He stated that there is a “couple billion dollars” of capital that would immediately go back into investors’ pockets, on a “overnight basis,” if GBTC was approved as a spot Bitcoin ETF, and that this capital would “bleed back” up to the fund’s net asset value. He said this would occur if the fund was approved as a spot Bitcoin ETF (NAV).

Sonnenshein noted that this is because GBTC is now trading at a discount to its NAV. However, if it were to convert to an ETF, there would “no longer” be a discount or a premium; instead, there would be a “arbitraged mechanism” incorporated in the product.

He reaffirmed that Grayscale is now “suing the SEC now,” and that the company may have a ruling appealing the SEC’s rejection of its original application as early as “fall 2023.”

In addition to this, he said that Grayscale has more than “a million investor accounts,” and that investors from all around the globe trust on the company to “do the right thing for them.”

Sonnenshein “can’t fathom” a scenario in which the SEC would have no interest in “protecting investors” or “returning that value” to those investors.

He continued by saying that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval, noting that if the application to challenge the SEC is denied, Grayscale may be able to appeal the case to the United States Supreme Court. He said that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval.

This comes as a result of the Securities and Exchange Commission (SEC) filing a 73-page brief with the United States Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its $12 billion Bitcoin Trust into a spot-based Bitcoin ETF in June 2022. The brief was submitted in response to Grayscale’s request to convert its Bitcoin Trust into a spot-based Bitcoin ETF.

The conclusions that Grayscale’s approach did not adequately safeguard against fraud and manipulation were the primary considerations that led to the SEC’s determination.

The regulator has arrived at a same conclusion in a number of past applications for the creation of spot-based Bitcoin ETFs.

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Digital Currency Group Sells Shares in Subsidiary’s Crypto Funds

by Blockchain News

The cryptocurrency conglomerate known as Digital Currency Group (DCG) is apparently getting ready to generate cash and maintain its liquidity by selling its assets in cryptocurrency funds that are managed by a subsidiary of the company known as Grayscale Investments.

According to a report that was published on February 7 by the Financial Times, which cited United States securities filings, DCG sold approximately one quarter of its shares in Grayscale’s Ether (ETH)-based fund for approximately $8 per share, despite the fact that each share held a claim to nearly double that amount in ETH. The filings were cited in the report.

In addition to this, it is said to have sold down small share parcels in Grayscale’s Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC)-based trusts. This is in addition to its Digital Large Cap Fund, which is a single fund that invests in Bitcoin (BTC), Ether, Polygon (MATIC), Solana (SOL), and Cardano (ADA).

The response that DCG gave when queried about the share sales was that “it is just part of our regular portfolio rebalancing.”

In spite of this declaration, there are others who feel that Barry Silbert’s DCG might be heading for some kind of financial difficulty.

Another of its companies, the cryptocurrency lending business Genesis Global Capital, filed a bankruptcy petition on January 19 and is reported to owe its creditors more than $3 billion.

Companies controlled by DCG have been significantly impacted by the contagion that has resulted from FTX’s downfall. Over the last several weeks, these companies have been forced to let go of over 500 people.

However, DCG has taken a number of actions to maintain liquidity in 2023, such as informing its shareholders in a letter dated January 17 that it would be discontinuing its quarterly dividend payments as it seeks to improve its balance sheets. This was one of the many initiatives that DCG has done.

After stating that it had received offers for the cryptocurrency media outlet CoinDesk that were greater than $200 million, DCG has reportedly sought the assistance of the financial advisory firm Lazard in order to assist it in weighing up options to sell CoinDesk, which is another of its subsidiaries.

According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include Grayscale, Genesis, and CoinDesk. Additionally, DCG has interest in a number of other businesses, such as the cryptocurrency exchange Luno and the advising company Foundry.

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Coindesk May Be Sold as Parent Company DCG Struggles

by Blockchain News

According to recent reports, the cryptocurrency news website CoinDesk is mulling over the possibility of being sold as its parent company, Digital Currency Group (DCG), wants to improve its financial standing.

The Wall Street Journal reports that CoinDesk has enlisted the assistance of investment bankers from the financial advising firm Lazard. These investment bankers are assisting the company in weighing its alternatives, which may include a whole or partial sale.

You know, I recently became aware that Coindesk is now available for purchase.

Charles Hoskinson, who tweets under the handle @IOHK Charles 19th of January, 2023 In the past few months, it has been reported that DCG has received multiple offers for the media company that are higher than $200 million. If these reports are accurate, this would represent an incredible return on investment for DCG given that the company was reportedly purchased by DCG for only $500,000 in 2016.

It would seem that Barry Silbert’s DCG is experiencing significant financial difficulties as of late. On January 17, the company informed its shareholders that it will be suspending dividend payments in an attempt to improve the soundness of its balance sheet and “preserve liquidity.”

On January 18, Bloomberg reported that another DCG subsidiary, crypto lending business Genesis Global, was intending to file for bankruptcy after it revealed that it owed creditors over $3 billion. This is undoubtedly the primary cause contributing to DCG’s current financial predicament.

According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include CoinDesk and Genesis.

The asset management company Grayscale Investments, the cryptocurrency exchange Luno, and the advising firm Foundry are all other businesses that are owned by DCG.

Some people believe that the article published by CoinDesk in November that revealed the irregularities in Alameda Research’s balance sheet was the first domino that eventually led to the collapse of the cryptocurrency exchange FTX as well as the liquidity issues that Genesis, its parent company DCG, and the broader cryptocurrency market are currently facing.

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Grayscale withholds on-chain reserve evidence for security reasons

by Blockchain News

Grayscale Investments, a company that sells cryptocurrency investment products, has declined to provide on-chain proof of reserves or wallet addresses in order to demonstrate the digital currency products’ underlying assets, citing “security concerns.” Grayscale Investments is a cryptocurrency investment product provider. Grayscale laid out information regarding the security and storage of its cryptocurrency holdings in a Twitter thread on November 18 that was dedicated to addressing investor concerns. The company stated that all of the cryptocurrencies that underpin its investment products are stored with Coinbase’s custody service, but it refrained from disclosing the wallet addresses.

Grayscale continued by saying, “We are aware that the previous point, in particular, will be a letdown to some,” but “fear created by others is not a good enough justification to violate intricate security mechanisms that have kept our clients’ funds secure for years.”

In the aftermath of FTX’s ongoing liquidity troubles and ultimately bankruptcy, Grayscale has decided to take this step in response to the mounting pressure being placed on the crypto industry to implement proof of reserves.

Some people on Twitter disagreed with Grayscale’s view that security concerns were behind its decision to withhold its wallet addresses. One user commented that although the addresses of Satoshi Nakamoto, the inventor of Bitcoin, are widely known and are of greater value to attackers, “Satoshi’s Bitcoin remains secure.”

Grayscale distributed a letter that was co-signed by Alesia Haas, the CFO of Coinbase, and Aaron Schnarch, the CEO of Coinbase Custody. The letter detailed Grayscale’s holdings according to its investment products and reaffirmed that the assets “are secure.” Additionally, the letter stated that each product has its “own on-chain addresses,” and that the crypto always belongs “to the applicable Grayscale product.”

Grayscale further said that every one of their products is structured as its own independent legal company, and that “rules, regulations, and contracts […] forbid the digital assets underpinning the goods from being leased, borrowed, or otherwise encumbered.”

Although Grayscale is best known for its Grayscale Bitcoin Trust (GBTC), a security that follows the price of Bitcoin, the company also offers products that follow the price of other cryptocurrencies, like Ether and Solana. Genesis Global, which serves as the liquidity provider for GBTC, announced on November 16 that it had halted withdrawals, citing “unprecedented market turmoil” as the reason. This “unprecedented market turmoil” had led to significant withdrawals from its platform, which exceeded its current liquidity. This has caused investor concerns.

Grayscale is also owned by the cryptocurrency-focused venture capital firm known as Digital Currency Group (DCG), which is also the parent company of Genesis.

Investors are speculating on GBTC’s exposure to Genesis, which may be one reason why the company’s stock is selling at a discount of over 43 percent compared to its net asset value.

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Crypto Groups Mobilize Support for Grayscale Spot Bitcoin ETF Lawsuit Fight

by Blockchain News

Three trade groups representing a broad interest in the crypto industry on Wednesday filed a court brief supporting a Grayscale Investments lawsuit against the Securities and Exchange Commission (SEC) for rejecting the company’s proposal for a spot Bitcoin exchange-traded fund (ETF).

The groups, which include the Blockchain Association, Chamber of Progress and Coin Center, and Chamber of Digital Commerce, filed the amicus brief in the U.S. Court of Appeals for the District of Columbia Circuit on Tuesday. In their filing, the group argued that the SEC had firmly denied every application to list ETFs that hold Bitcoin, despite approving several ETPs holding Bitcoin derivatives.

The group stated that the SEC’s denial of Grayscale’s proposal to convert its flagship fund into an ETF violates the regulator’s procedures. The group explained that despite the approval of multiple futures-based Bitcoin ETPs, the SEC has abandoned its investor protection mandate and abused its authority by denying every application for a spot-based Bitcoin ETP, including Grayscale’s proposal.

The group said denying the applications is inconsistent with the Commission’s treatment of similar products and “cuts against SEC regulatory and policy imperatives” by depriving consumers of a product that clearly satisfies regulatory requirements for listing on a national securities exchange.

The groups argued that there is strong consumer demand in the U.S. for Bitcoin exposure and Bitcoin ETFs offer safe, transparent choices for investors. The group claimed that the SEC has applied a double standard in universally disapproving applications to list spot Bitcoin exchange-traded products.

Crypto firms such as Blockchain Capital, Chainalysis, Goldman Sachs, Binance.US, and Fidelity are also included in the membership lists of the Blockchain Association, Chamber of Progress and Coin Center, and the Chamber of Digital Commerce.

In June, the SEC rejected Grayscale’s application to convert its flagship Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund, citing a failure by the investment manager to answer questions about concerns around market manipulation and lack of sufficient protections under the Grayscale proposal. Grayscale then filed a petition challenging the decision with the U.S. Court of Appeals for the District of Columbia Circuit.

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Bitcoin (BTC) $ 28,063.52 3.81%
Ethereum (ETH) $ 1,727.43 3.19%
Litecoin (LTC) $ 67.73 2.79%
Bitcoin Cash (BCH) $ 243.43 2.56%