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Grayscale sends reply brief to SEC in ETF Suit: What’s next?

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  • Grayscale has filed a reply brief in its appeal against the denial of the SEC’s application to convert its $12 billion GBTC into a spot-based Bitcoin ETF.
  • Grayscale also claimed that the SEC overstepped its bounds.

Grayscale has filed a reply brief in its appeal against the denial of the United States Securities and Exchange Commission’s (SEC) application to convert its $12 billion Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin [BTC] exchange-traded fund (ETF).

The brief, filed in the District of Columbia Circuit Court, addressed issues raised in the SEC’s December reply brief and restated its arguments.

The SEC’s decision was based on findings that Grayscale’s proposal did not adequately protect against fraud and manipulation. The agency had made similar findings in previous applications to create spot-based BTC ETFs.

SEC ‘overstepped its bounds,’ alleges Grayscale

Grayscale responded to the denial in court by claiming that the SEC had acted arbitrarily in treating spot traded exchange-traded products differently than futures traded products. It stated:

“There is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market.”

The company also claimed that the SEC overstepped its bounds, commenting:

“The Commission is not permitted to decide for investors whether certain investments have merit– yet the Commission has done just that, to the detriment of the investors and potential investors it is charged to protect.”

Further, Chief Legal Officer Craig Salm tweeted on 13 January:

“The case is moving swiftly. While timing is uncertain, oral arguments may be as soon as Q2 [2023].”

For the uninitiated, the company filed an application with the SEC in October 2021, and the agency denied it on 29 June, 2022.

Grayscale is owned by the Digital Currency Group (DCG), which is experiencing financial difficulties. DCG will reportedly sell part of its venture capital holdings to offset the shortfall due to its involvement with the associated cryptocurrency broker Genesis Global Trading.

DCG’s venture arm has over 200 crypto-related projects, such as exchanges and banks, including Grayscale. Spread across around 35 countries, the group has a total valuation of around $500 million.


Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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