Grayscale CLO Opens Up On The Firm’s Preparation For Case With SEC
- Grayscale Investments CLO has opened up on the firm’s actions after the rejection of their request for a Bitcoin spot ETF by the SEC.
- CLO Craig Salm stated that the firm is looking to take the fight to the SEC and is ‘laser’ focused on the same.
After waiting for months for the approval of its request for the conversion of Grayscale Bitcoin Trust (GBTC) to a Bitcoin spot ETF, Grayscale revealed that it will take the fight to the United States Securities and Exchange Commission (SEC) in a legal battle.
Grayscale Chief Legal Officer Craig Salm stated that the firm is ready adding that its counsel are “laser-focused” in writing their brief which will be presented to the appellate court when the hearing of the case against the SEC begins.
The SEC has yet to allow a Bitcoin spot ETF to trade on stock exchanges. A spot ETF would be backed by direct Bitcoin and will give exposure to the people to the leading cryptocurrency without actually holding it. The regulatory authority has dismissed dozens of Bitcoin ETFs.
The reason that the SEC gave while rejecting the spot ETF request from Grayscale was that the firm failed to prove that its product is “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”
Grayscale went as far as to send a letter to the regulatory authority in which it said that multiple rejections would mean a violation of the Administrative Procedure Act (APA) which governs the process by which federal agencies develop and issue regulations. This is because the SEC has approved multiple Bitcoin futures ETFs and a short ETF as well.
In Bloomberg’s crypto event on July 19, the Grayscale CLO stated that the SEC and Grayscale are now locked in a battle and since the firm is challenging a decision from a regulatory body, its case automatically bypasses district courts, going straight to the appellate level. This will save time in a lengthy battle.
“Based on discussions with our counsel, we’re hearing at the appellate level anywhere from 9 to 12 months — could be shorter, could be longer,” Salm said. “Litigation is inherently uncertain in terms of timing.”Salm stated.
Salm added that the argument from Grayscale’s side is “straightforward and simple,” adding:
You have futures ETFs. You have spot ETFs. They both draw their pricing based on the underlying markets, so if you’re okay with one, you should also be okay with the other.”