SEC Has ‘No Grounds’ to Reject Bitcoin ETF Conversion, Grayscale Says

Grayscale Investments has told the U.S. Securities and Exchange Commission it has “no grounds” to reject the conversion of its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund.

The SEC was last week ordered to review its prior rejection of the conversion in the D.C. Circuit Court of Appeals, with Circuit Judge Neomi Rao agreeing with Grayscale’s position that its proposed product is not materially different from bitcoin futures exchange-traded products (ETPs) that already trade in the U.S.

“After the Commission has had the opportunity to fully analyze the court’s opinion in light of the record, including the reasons for rejection set forth … we believe the Commission should conclude that there are no grounds for treating the Trust differently from ETPs that invest in bitcoin futures contracts,” Grayscale’s legal team wrote in a letter to the regulator on Tuesday.

Grayscale added a swipe at the SEC’s track record for rejecting spot bitcoin ETF applications, saying that if there was any difference between these and futures-based product, “it would have surfaced by now in one of the 15 Commission orders that rejected spot bitcoin Rule 19b-4 filings even after bitcoin futures ETPs began trading.”

Last week’s court decision required the SEC to review its rejection of Grayscale’s application, not to approve it, despite the tone of Grayscale’s letter suggesting approval is now a foregone conclusion.