The United States Securities and Exchange Commission, the SEC, could be sued by Grayscale Investments LLC if it fails to approve the conversion of the company’s $30 billion BTC fund into a BTC ETF.
Grayscale Threatens To Sue SEC
This is what a Bloomberg report published on Monday (28) revealed.
The SEC has until July 6 to decide whether to approve the digital asset manager’s request to make Grayscale BTC Trust (GBTC) an exchange-traded fund.
“I think all options will be on the table in July,” Grayscale CEO Michael Sonnenshein told Bloomberg.
It is noteworthy that, to date, the SEC has not approved any proposal for an EFT based on the cryptocurrency’s spot price.
Instead, it only approved funds based on BTC futures, like the one from ProShares in October of last year. Since then, the regulator has denied ETFs in full view of BTC from Valkyrie, Kryptoin, VanEck, Fidelity and others.
Also according to Bloomberg, Davis Polk lawyers, on behalf of Grayscale, sent a letter to the SEC in late November arguing in favor of the BTC spot ETF.
In all, more than 2,700 letters have already been forwarded to the regulator asking for approval of a spot BTC ETF. As highlighted Sonnenshein, it is “extremely encouraging” to see investors supporting their efforts.
In addition, he stressed that every day that the fund does not operate as an ETF is a loss for investors. He further noted that the absence of spot ETFs forces investors to invest in futures-based products.
For him, this “SEC strategy” is not intended to protect investors:
“GBTC has been trading since 2015 and has been an SEC reporting company since January 2020. So every day that it is being traded and bought and sold by investors and not being tied to the familiarity and protections of an ETF, we we really don’t feel like the SEC is doing everything it can to really protect investors,” he said.
Either way, Sonnenshein believes the SEC won’t be able to delay approval of a BTC ETF too long:
“It is a matter of when, not a matter of whether, a spot BTC ETF will be approved,” said Sonnenshein.
What does the SEC say?
In rejecting spot BTC ETFs, the SEC commonly cites fraud, manipulation, and investor protection concerns.
More precisely, it alleges that the companies failed to meet the requirements that the rules of a securities exchange be “designed to prevent fraud and manipulative acts and practices” and to “protect investors and the public interest”.