A similar decision was also made on Wednesday in relation to Bitwise’s exchange-traded product (ETP), citing the same reasons.
Grayscale has announced a legal challenge against the recent rejection of its application to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot exchange-traded fund (ETF) by the US Securities and Exchange Commission.
It announced that the chief legal strategist, former United States Attorney General, and partner at Munger, Tolles & Olson, Donald B. Verrilli, Jr., had filed a petition for review with the United States Court of Appeals for the District Circuit of Columbia.
According to a June 29 statement from the securities regulator, the request was disapproved “to protect investors and the public interest” because the proposal failed to demonstrate how it is “designed to prevent fraudulent and manipulative acts and practices.”
A similar decision was also made in relation to Bitwise’s exchange-traded product (ETP) on Wednesday, citing the same reasons.
Grayscale Investments, which has $12.92 billion in assets under management in its GBTC, had been awaiting an SEC decision to convert its flagship Bitcoin trust into a spot ETF since filing with the regulator on Oct. 19, 2021. Such a decision comes a week before the July 6 deadline.
It is worth noting that earlier this month, Commissioner of the United States Securities and Exchange Commission (SEC), Hester Peirce, sometimes known as “Crypto Mom” for her fervent support of the sector, participated at a conference organized by the Federalist Society, of conservative and libertarian tendency, entitled “Regulation of the new cryptoecosystem: Necessary regulation or paralysis of future innovation?”
Her lengthy speech – more than 4,000 words in the prepared version, which was extemporaneously enlarged as he delivered it – contains some of the most forceful criticism of SEC policy he has delivered to date.
Earlier this month, Grayscale announced that it had hired a former United States Attorney General, Donald B. Verrilli Jr., in preparation for a possible legal dispute with the SEC over his application if it were denied.
Other attorneys on the Grayscale legal team include Davis Polk & Wardwell LLP and their in-house counsel, including Craig Salm, who is currently General Counsel.
In March, Grayscale CEO Michael Sonnenshein told Bloomberg that his company would consider filing an Administrative Procedure Act (APA) lawsuit, if the financial regulator rejected its Bitcoin Spot ETF.
Expectations and Announcements
On Wednesday, James Seyffart, an ETF analyst at Bloomberg Intelligence told his 19,400 Twitter followers that the SEC decision on both ETFs came earlier than he thought, but were both expected.
On Twitter, Seyffart posted that, “Certainly earlier than I expected but the decision was as expected. BOTH @Grayscale’s $GBTC and @BitwiseInvest’s spot #Bitcoin ETF were “Disapproved” by the SEC today.”
He added that, “We’re coming up on a couple big spot #Bitcoin ETF decisions from the SEC. @BitwiseInvest is due by July 1st and @Grayscale’s $GBTC conversion is due July 6th. Unfortunately, we expect *denials* on both. I think it’s possible we get both decision letters this Friday 1/x.”
By Audy Castaneda