Grayscale tells SEC ‘no basis’ to approve Bitcoin futures ETFs and not spot ETFs
The SEC has rejected a proposal to approve Bitcoin ETFs, but it’s possible the agency will change its mind if Grayscale Investments can show “no basis” for an outright ban. Experts say that even without approval of BTC futures and spot trading, this is still good news for cryptocurrency enthusiasts because it signals greater acceptance from finance regulators.
The “bitcoin futures price” is a cryptocurrency that was created by Satoshi Nakamoto. The first bitcoin futures were released in December 2017. The SEC has said that they will not approve Bitcoin Futures ETFs and not spot ETFs because there is no basis for it to do so.
Grayscale Investments has retaliated against the Securities and Exchange Commission (SEC) for rejecting VanEck’s application for a spot Bitcoin ETF.
On Nov. 29, the operator of the Grayscale Bitcoin Trust (GBTC) wrote to SEC Secretary Vanessa Countryman, arguing that the SEC is incorrect in rejecting spot Bitcoin ETFs since it has already authorized three Bitcoin futures ETFs, one each from VanEck, Valkyrie, and ProShares.
“There is no justification for the SEC’s argument that investing in the derivatives market for an asset is permissible for investors but investing in the asset itself is not,” Grayscale claims.
It contends that the SEC violated the Administrative Procedures Act (APA) by neglecting to treat the two Bitcoin ETFs equally.
A Bitcoin futures ETF enables traders to bet on the future price of Bitcoin (BTC) through derivatives, while a spot Bitcoin ETF allows traders to trade on the asset’s present price, thereby acting as if they were owning it.
Grayscale is far from uninterested, having submitted an application to launch GBTC as a Bitcoin spot ETF in October, with a decision expected by Christmas Eve. The Securities and Exchange Commission (SEC) rejected VanEck’s comparable application on Nov. 12 because it did not comply with the Securities Exchange Act of 1934’s criteria (Exchange Act).
Grayscale rejects those reasons for rejection.
“We think this explanation failed to fully account for substantial regulatory and competitive changes since the Commission first evaluated and declined a national securities exchange’s application to list and trade shares of a spot Bitcoin ETP in 2017,” according to the statement.
Grayscale thinks the SEC permitted applicants to avoid the requirements of Section 6(5)(b) of the Exchange Act, which must be followed by Bitcoin spot ETF applicants, by authorizing Bitcoin futures ETFs.
Section 6(5)(b) is intended to “protect investors and the public interest” by prohibiting “unfair discrimination between customers, issuers, brokers, or dealers” and eliminating “fraud and market manipulation.”
Invesco has launched a spot Bitcoin ETP on the Deutsche Borse.
Grayscale claimed that their Bitcoin spot ETF will be launched in July 2022, but it’s uncertain if that forecast will come true.
GBTC manages around $37.1 billion in assets and has 692,370,100 outstanding shares.