The US Securities and Exchange Commission (SEC) ongoing lawsuit with Ripple Labs had waged on since December 2021, although there has been no definitive outcome as of yet. Now, another player in the digital assets space is considering suing the SEC if things go south.
Can the regulatory watchdogs handle another one?
Legal showdown this summer?
In a Bloomberg interview, Grayscale’s CEO opined that his company would consider suing the SEC if it did not approve its Bitcoin spot ETF. The Securities and Exchange Commission’s final deadline to rule on the digital-asset manager’s application to convert the Grayscale Bitcoin Trust into a physically-backed ETF was 6 July.
Grayscale CEO Michael Sonnenshein would consider an Administrative Procedure Act (APA) lawsuit if the regulatory agency delayed it further; he asserted:
“I think all options are on the table come July.”
Thereby showcased importance of standing up for investors who had suffered extensively. In addition, the SEC had allowed Bitcoin derivatives-backed ETFs to trade while continually denying spot ETF applications, which made things worse. As covered before, post-SEC’s nod, three Bitcoin futures ETFs launched in late 2021.
On the other hand, the conversion of the Grayscale Bitcoin Trust into a Bitcoin spot exchange-traded fund filed in October 2021 faced rejection in February this year. SEC cited a need for a more extended period to consider the proposed changes while mentioning risks and concerns regarding the same. Nonetheless,
“The Grayscale team has been putting the full resources of our firm behind converting GBTC, our flagship fund, into an ETF. Investors must know that we have and will continue to advocate for them.”
Piling demand
Investors in all 50 states owned GBTC, with around 800,000 accounts in the United States. As a result, GBTC traded with a discount of over 20% compared to the net asset value. At press time, the statistic stood at:
Source: GBTC
The trust remaining as it is, rather than converted into an ETF, had put investors at risk. Investors were “unable to enjoy the protections afforded by the ETF wrapper. The SEC is not doing everything [it] can to actually protect investors,” Sonnenshein argued.
Another factor that weighed in one the same is that spot Bitcoin ETFs are traded in countries like Canada, Brazil and the United Arab Emirates.
