The largest digital currency asset management in the world, Grayscale Investments, has filed an appeal with the U.S. Securities and Exchange Commission (SEC) to demand equitable treatment for spot Bitcoin Exchange-Traded Funds (ETFs). The decision was made after the SEC rejected a rule change proposal by NYSE Arca in June 2022 to list and trade shares of the Grayscale Bitcoin Trust (GBTC), which is distinct from other ETFs based on Bitcoin futures.
The underlying assets of the Grayscale Bitcoin Trust and Bitcoin futures-based ETFs are what distinguish one from the other. Other ETFs are based on Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), while the GBTC owns Bitcoin, giving investors direct exposure to the genuine cryptocurrency.
Grayscale Bitcoin Trust, which offers institutional and ordinary investors a way to invest in Bitcoin through conventional brokerage accounts, has garnered a sizable amount of investment and currently has over $18 billion in assets. It was also gathered that the SEC has only authorized Rule 19b-4 filings for Exchange-Traded Products (ETPs) based on Bitcoin futures that are supported by surveillance-sharing arrangements with the Chicago Mercantile Exchange (CME).
The SEC is now being urged by Grayscale Investments to level the playing field and approve spot Bitcoin ETPs as well. The company claims that all investors’ interests should come first in the approval process, and all proposed spot Bitcoin ETPs should be approved at once.
Analysis by Decrypt’s André Beganski says that the SEC may concede to Grayscale’s opinion and give investors a variety of options while guaranteeing a fair and competitive market for bitcoin investments by treating spot and futures-based ETFs equally.
Grayscale Argues The Benefits Of Spot Bitcoin ETPs, List Advantages
Grayscale emphasizes the rising demand for spot Bitcoin ETFs in their pitch to investors who would rather have direct ownership of the underlying asset than buy futures contracts. Speculators believe that SEC may create new investment opportunities in the cryptocurrency sector by approving spot Bitcoin ETPs, appealing to investors with varying risk tolerances and investment philosophies.
Spot Bitcoin ETPs, according to proponents of Grayscale’s argument, may further increase market transparency and price discovery because they allow for direct ownership of Bitcoin rather than speculation on its future price movements through futures contracts.
Also, Beganski added that by resolving some of the regulatory obstacles about digital assets, this transparency may help the Bitcoin industry mature and become more stable. However, spot Bitcoin ETPs critics express concern about possible market manipulation and a lack of effective oversight systems.
They argue that futures-based ETFs are a better candidate for approval since the current surveillance-sharing agreements with the CME provide a level of monitoring and security that spot Bitcoin ETPs might not.
SEC Adamant On Grayscale’s Appeal, BlackRock, Other Makes Efforts
The SEC’s response to Grayscale’s appeal and whether they will change their position on spot Bitcoin ETFs remain unknown, even amid different opinions and industry rumors on the possible outcome. Crypto Daily’s Amara Khatri, in her latest publication, says that regulatory authorities like the SEC will be encountering problems while trying to balance investors’ safety.
Investigation into the popularity of spot Bitcoin ETF within the cryptocurrency community reveals that its presence is most anticipated. Cryptocurrency enthusiasts, most especially the Bitcoin community have a firm belief that the ETF will mark a significant milestone in the match for a general BTC adoption.
The community also opined that such a move is the pathway to further validate the cryptocurrency as one of the globally recognized legitimate assets. Recall, that the Security Exchange Commission (SEC) has been working on approving the spot Bitcoin ETF for over a decade. SEC has been turning down the application for reasons associated with potential manipulation and fraud.
In other news, Fidelity and BlackRock have retracted their earlier application for a BTC ETF. According to the company’s statements, their actions were geared towards addressing SEC’s concern – BlackRock has said that they are currently working with Coinbase to finalize the surveillance agreement.
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