- The US District Court of Appeals is set to hear Grayscale’s arguments against the SEC’s ruling to reject its spot Bitcoin ETF application on March 7.
- Grayscale claims that a spot Bitcoin ETF is no different from a futures ETF and should not be grounds for disapproval, while the SEC believes there is greater risk of fraud with spot ETFs.
- Judges are expected to reach a final decision in the coming months, with Bloomberg analysts believing there is less than 50% chance of overturning the SEC’s ruling.
In June 2022, the U.S. Securities and Exchange Commission (SEC) rejected Grayscale’s application for a spot Bitcoin exchange-traded fund (ETF). The SEC argued that such an investment product carries a greater risk of fraud and does not sufficiently protect investors. Grayscale disagreed and immediately sued the SEC, appealing its decision in court.
Grayscale’s appeal is based on the argument that a spot Bitcoin ETF is no different from a futures ETF — which has already been approved by the SEC — and therefore should not be grounds for disapproval. The SEC believes otherwise as it argues that futures contracts are traded on public exchanges like the Chicago Mercantile Exchange (CME), which are supervised by federal regulators and have various tools in place to detect fraud and price manipulation. Grayscale maintains that both spot and futures ETFs rely on Bitcoin’s price and thus carry the same levels of risk regardless of where they are traded.