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The crypto market’s surge at the end of 2021 was triggered by the approval of a futures ETF. Now, the market eagerly awaits another ETF approval that could ignite the next bull season. However, the SEC Chairman seems determined not to deliver the eagerly anticipated news that crypto investors have been waiting for. Citing “manipulative markets” as the reason, the SEC is strongly opposed to the spot Bitcoin ETF.
Spot Bitcoin ETF in Court
Grayscale is currently providing corporate crypto investment services with its Bitcoin Trust and GBTC. However, since the fund does not support redemptions, it trades at a negative premium, and it is known that the company is determined to convert it into an ETF. Following the SEC’s refusal, Grayscale has taken the matter to court where the first hearing has taken place. There, SEC attorneys argued that approval cannot be granted due to Bitcoin’s highly manipulative nature.
The fact that the SEC approves a futures ETF but rejects spot ETF applications for Bitcoin seems to present a serious contradiction. After all, the price of both is determined by the spot BTC price. For Grayscale to survive, it must convert GBTC into an ETF. The trust trading at a negative premium also significantly harms investors.
Emphasis on Injustice
Today, Grayscale officials sent a new letter to the court requesting help in resolving the issue. The company points out the inequity in the denial of spot approval while referring to the recently approved leveraged Bitcoin ETF.
“Today, our lawyers sent a letter to the court highlighting the disparity between the SEC’s approval of a leveraged bitcoin futures ETF while continuing to reject approval for spot bitcoin ETFs like GBTC. We continue to advocate for the conversion of the Grayscale Bitcoin Trust into a SpotBitcoinETF. The SEC rejected our application a little over a year ago, and we immediately filed a lawsuit challenging their decision. Actions since then, such as the SEC’s approval of a leveraged bitcoin futures ETF, have provided further support to our legal argument that the SEC is acting arbitrarily.”
“The 2x leveraged bitcoin futures ETF aims to double the performance of the S&P CME Bitcoin Futures Daily Roll Index using leverage every day. This exposes investors to a more risky investment product than traditional bitcoin futures exchange investment products. To be clear, we’re not saying that such products shouldn’t exist. Instead, we’re highlighting that there’s no good reason for spot products to continue to be denied approval while leveraged futures products are allowed. Ultimately, the excitement for these products supports what we’ve been saying from the start.”
In the past month, many leading names in the financial world, notably BlackRock, have entered the race to apply for spot Bitcoin ETF approval.
