Grayscale vs SEC: The battle for the Bitcoin ETF continues

In 2021, the world’s largest crypto management company filed an application with the SEC. It was a request to convert its stock, GBTC, into a bitcoin-based spot ETF (BTC). The Securities and Exchange Commission denied Grayscale’s request. The regulator cited as a reason that there was a risk of market manipulation with spot Bitcoin ETFs. He also said that through his rejection, he seeks to protect investors. Now the CEO of Grayscale explains why the US regulator frowns on Bitcoin spot ETFs.

Would the SEC feel unable to regulate the Bitcoin spot market?

Last year, Grayscale sued the SEC for rejecting its request to create a spot Bitcoin ETF. Now, Michael Sonnenshein, the company’s CEO, is lifting the lid on the SEC’s real fears about the request. He indicated that in fact the regulator does not feel able to fully control the Bitcoin spot market. Sonnenshein made the revelation on March 8 during his interview on CNBC’s “Squawk Box.”

The CEO of Grayscale said: “They say there aren’t enough ways to detect fraud and manipulation in the bitcoin cash market“. He added that the arguments of the American regulator in this case are not solid. He recalled that the SEC had approved crypto futures ETFs. Yet, according to him, these are tied to the crypto spot market. He argues that there is “99.9% correlationbetween the two types of ETF.

Why won’t the SEC greenlight the Spot Bitcoin ETF?

Sonnenshein has explained : “Basically, the basis of this case is that the SEC has approved bitcoin futures ETFs and continues to deny spot ETFs like GBTC. (…) But the bitcoin futures market is a derivative of the spot market. They are therefore two inextricably linked markets.“. In this context, the leader finds that the actions of the SEC are “arbitrary and capricious“.

Michael Sonnenshein’s statements come as the Bitcoin ETF battle continues between Grayscale and the SEC. For the CEO of the crypto management company, the case is progressing well. The manager maintains thatit’s never been clearer that investors want access to bitcoin through an ETF“.

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