Grayscale wins Lawsuit Against the SEC

The Grayscale has won a case against SEC where it alleged wrongful rejection of its spot Bitcoin ETF.

The Grayscale has won a case against SEC where it alleged wrongful rejection of its spot Bitcoin ETF.

If SEC is forced to approve this ETF by the court, which seems the most probable case, it could open a pandora’s box for the others.

Grayscale’s Arguments

Grayscale argued that it was following the similar safeguards against crypto manipulation. Further, the ETF by Grayscale as well as Future ETFs were tracking the same underlying Bitcoin price.

The case was presented by Grayscale’s legal counsel Donald Verrilli Jr. He said to the court in March that a spot Bitcoin ETF would better protect the investors since it would give them the benefit of CME’s oversight.

The SEC rejected this argument and said that Grayscale did not have sufficient data to say whether CME’s futures surveillance could also detect potential manipulation in the markets.

We believe, this was an understatement for CME which has sophisticated mechanisms to detect fraud and comply with AML rules. Also federal law agencies like FBI exist for the very same purpose.

What After the Ruling

If any party is unsatisfied, they can appeal within 45 days with the US Supreme Court. If no parties appeal, the court will mandate how the decision is to be executed.

The SEC can still reject the proposals but on other grounds.

Grayscale also could file another application with the additional changes that were notified by the SEC.

About The Case

Grayscale has been fighting a spot Bitcoin ETF against the SEC in the US District of Columbia Court of Appeals about the alleged wrongful rejection of spot Bitcoin ETF by Grayscale.

The SEC denied approval to Grayscale Bitcoin Trust (GBTC.PK) to convert itself into an ETF. Grayscale also proposed to adhere to the same manipulation safeguards that were in this future ETFs.

Till now, the SEC has never allowed a spot Bitcoin ETF and in the past has rejected several applications. However, the agency has approved several future Bitcoin ETFs.

Currently, big names like Blackrock, Invesco, Ark/21Shares, and several others were in line to get approval in the USA. Europe has already approved its spot Bitcoin ETF which was recently launched in the Amsterdam Stock Exchange. Europe’s first ETF was by Jacobi Asset Management.

Dhirendra Chandra Das
Dhirendra Chandra Das

Dhirendra is a professional with dual degree MBA specializations in Finance and Marketing. He has a keen interest in finance and crypto. Starting his investment journey in Finance since 2015, Dhirendra has more than 8 years experience in Traditional Finance and 3 years experience in Decentralized Finance.

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