According to Grayscale Investments, the U.S. Securities and Exchange Commission has filed its first legal brief in the case the cryptocurrency asset manager launched after the SEC denied its application for a spot bitcoin exchange-traded fund.
In a statement released on Friday, the corporation described the filing of the amicus papers as ” the next milestone in our ongoing litigation following the filing of our opening brief on October 11 and the supporting amicus briefs shortly after.”
In its opening brief filed in October, Grayscale argued that the regulatory approval of bitcoin futures linked to spot market pricing amounted to an unfair application of the law.
Grayscale’s 850,000 existing shareholders were affected when the SEC denied the company’s request in late June to convert its flagship GBTC fund into an exchange-traded fund (ETF).
The SEC responded to Grayscale’s petition with a 73-page brief, in which it defended its rejection of the spot ETP as “reasonable, reasonably explained, supported by substantial evidence” and claimed there was “no inconsistency in the Commission’s disapproval of Grayscale’s spot ETP despite having approved two CME bitcoin futures ETPs.”
SEC Backs Its Decision
The response states: “The Commission previously approved ETPs that hold only futures contracts that trade on the CME, which is registered with the CFTC; those ETPs’ underlying assets are thus subject to robust surveillance,” it further reads: “The bitcoin spot market, by contrast, is fragmented and unregulated, and petitioner presented no supportable basis to conclude that the CME’s surveillance of futures trading would sufficiently detect and deter fraud and manipulation targeting the bitcoin spot market and thereby protect against fraud and manipulation in Grayscale’s product.”
Grayscale’s reaction to the SEC filing echoed its initial brief and criticized the SEC for “creating an uneven playing field for investors by approving Bitcoin futures-based ETFs, while continuously denying spot Bitcoin ETFs.”
One of the world’s most successful digital investing companies, Grayscale Investment, has recently announced that it will not be disclosing any information related to its proof-of-reserve policies for reasons of security. Grayscale made the announcement via their verified Twitter account.