Grayscale Urges SEC to Approve Spot Bitcoin ETF Filing

Grayscale has urged the U.S. Securities and Exchange Commission (SEC) to approve its application for a spot exchange-traded fund (ETF), asserting that any further delays would negatively impact investors.

On September 5, Grayscale’s legal team sent a letter to the SEC requesting a meeting to discuss the path forward for the approval of a spot Bitcoin ETF. The correspondence emphasized that the SEC’s review of Grayscale’s application has taken nearly three times longer than allowed under securities law.

Grayscale’s lawyers argued that the SEC has no valid reason to treat spot Bitcoin ETFs differently from futures-based Bitcoin ETFs. The company is prepared to launch its product and is calling on the SEC to expedite the approval process.

In the letter, Grayscale stated, “Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a bitcoin futures ETP from a spot bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot bitcoin ETPs.”

Additionally, the lawyers expressed confidence that if there were any valid arguments for differentiating between spot Bitcoin ETPs and futures-based ETPs, they would have emerged by now.

Historically, the SEC has consistently denied applications for spot Bitcoin ETFs, citing concerns that applicants failed to demonstrate adequate protections for investors against market manipulation and fraud.

In a related development, a three-judge panel recently overturned the SEC’s decision to reject Grayscale’s efforts to convert its GBTC product into an ETF. While the ruling requires the SEC to reevaluate Grayscale’s filing, the Commission retains the option to appeal the decision.

Grayscale’s legal team highlighted that U.S. investors favor spot Bitcoin ETFs and should not be compelled to use less efficient and more complex investment structures simply because those are the only types not yet approved by the SEC. They emphasized that continuous delays from the SEC harm investor interests.

The letter also pointed out that Grayscale is facing increasing competition from other entities filing for spot Bitcoin ETFs. The company maintains that the SEC cannot impose additional requirements on spot Bitcoin ETFs, as a recent court ruling established that its proposed product shares similarities with existing futures Bitcoin ETFs, both featuring a surveillance-sharing agreement with the Chicago Mercantile Exchange.

The SEC has recently delayed decisions on six spot Bitcoin ETF applications from various asset management firms, extending the timeline by another 45 days, which gives the Commission until October to issue a verdict or further postpone its decision.