CoinDesk reports the proposed Grayscale Bitcoin ETF garnered support from significant players to overturn the SEC’s rejection in late June. Cryptocurrency advocacy groups such as the Blockchain Association, the Chamber of Digital Commerce, and Coin Center support the Grayscale ETF. Notably, two former SEC commissioners and CFTC officials submitted amicus briefs expressing support for the exchange-traded fund.
Grayscale wants to convert its Bitcoin Trust into an ETF.
The investment firm is notably owned by the same parent company as CoinDesk, a necessary disclosure for their report. Grayscale already trades Bitcoin on the US stock exchange through its trust. However, there is a crucial difference between trusts and ETFs, which the SEC feels is grounds for rejection. Investors can’t cash out existing trust shares to balance out market demand. Because of that fact, the trust trades at a lower value than the sum of its holdings.
As mentioned earlier, crypto advocates criticized the denial by the SEC to turn the trust into an ETF. Coin Center, the Blockchain Association, and the Chamber of Digital Commerce pointed out the SEC previously approved Bitcoin ETFs. Though, in that case, the investment was even riskier than the Grayscale proposal. The previously approved ETFs held Bitcoin futures rather than the cryptocurrency itself. Of Note, Coin Center is locked in two lawsuits with the US Treasury over cryptocurrency.
Former SEC and CFTC officials, among others, support the Grayscale Bitcoin ETF.
Former SEC Commissioner Joseph A. Grundfest, and former SEC Chairman Harvey Pitt, support Grayscale in the brief. Other notable contributors include former CFTC Commissioners Brian Quintenz and Mark Wetjen, who now works for Sam Bankman-Fried’s FTX.
The consensus among the supporters is the SEC’s previous denial of Grayscale’s Bitcoin ETF arbitrarily reduces investor options. They allege the SEC decided on “merit-based regulation” as they’ve previously approved riskier Bitcoin-related ETFs.
The Securities Exchange Commission, especially its current Chair, Gary Gensler, has come under fire for its recent handling of cryptocurrency.
