As Grayscale sues the SEC, a significant Bitcoin ETF legal battle begins

The US-based Grayscale Investments, one of the largest bitcoin (BTC) and cryptocurrency investment firms, filed a lawsuit against the US Securities and Exchange Commission (SEC) after the latter denied its request to turn the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund in the world, into a spot exchange-trading fund (ETF).

According to the company, "it is the SEC’s arbitrary and capricious actions and discriminatory treatment of issuers that necessitates elevating this matter to the courts in the best interest of GBTC and our investors."


They contend that the market watchdog is failing to treat BTC investment vehicles consistently as demonstrated by its approval of several BTC futures ETFs while rejecting GBTC's application to convert to a spot ETF.

"If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold that same asset," they continued.


The SEC continues to assert that the conversion of GBTC would not stop fraudulent and manipulative acts and practices, protect investors, or the general welfare.


Currently, the GBTC has bitcoins worth $12.9 billion. According to Grayscale, as of June 29, GBTC shares were trading at a price that was roughly 30% below their net asset value, or about USD 8 billion in unrealized shareholder value.


The company stated that "we hold firm in our belief that converting GBTC to a spot Bitcoin ETF remains the best option for investors: it would effectively eliminate the discount and cause the shares to track the price of bitcoin."


BTC is trading at USD 20,078 at 03:49 UTC, down 1% from the previous day and essentially unchanged from the previous week.

By fLEXI tEAM