Grayscale told the SEC that approving their ETF registration is the agency’s only option.
Grayscale sent a letter to the Securities and Exchange Commission (SEC) on Tuesday with critical messages for the agency as it pursues the next steps, following its strong court win against the regulator.
Given the court’s decision, Grayscale brought up that the commission has run out of excuses to keep delaying the launch of a Bitcoin spot ETF.
The SEC Is Out Of Options
Grayscale urged the SEC to “move expeditiously” toward spot ETF approval, citing “no grounds” to treat spot Bitcoin ETFs differently than futures ETFs in its comment letter published on Tuesday.
“If any other reason could be offered in attempting to differentiate spot bitcoin ETFs from bitcoin futures ETFs… we are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot bitcoin filings,” stated Grayscale.
The SEC was accused of acting “arbitrary and capricious” in Grayscale’s complaint against it because it appeared to prefer Bitcoin futures ETFs over spot ETFs.
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While the SEC maintained that the bitcoin futures market posed distinct risks from the spot market, the court ruled that the agency was “unreasonable” in its “discounting of the obvious financial and mathematical relationship between the spot and futures markets.”
The company also said that its filing to convert its Bitcoin Trust into a spot ETF has taken “nearly three times the length” because the SEC can prolong its approval/denial deadline. Grayscale’s filing was made public in the federal registrar on November 8, 2021, and the SEC postponed its decision until early July 2022.
The SEC declined the application on June 29, 2022, but Grayscale’s lawsuit overturned the decision. “We question whether a disapproval order that is later vacated in full by the Court of Appeals can fulfil the Commission’s obligation to act within the timeframe needed to avoid deemed approval,” stated Grayscale.
Is it important to have a Spot Exchange Surveillance Agreement?
Assuming the SEC has time to reconsider its decision, Grayscale noted that the agency is continuing to harm existing GBTC investors by delaying approval and that investors in general prefer spot ETFs over futures ETFs.
The company also reminded the SEC that other recent spot ETF applicants are trying to sign a surveillance-sharing agreement with Coinbase to meet agency requirements. Grayscale, which wants a similar deal with the CME, said the CME alone should be enough to obtain approval.
“We believe the Commission may not now impose an additional, new requirement on spot bitcoin ETPs for a surveillance-sharing agreement with a spot bitcoin market,” it stated.