Grayscale could file a lawsuit under the Administrative Procedure Act (APA).

Grayscale Investments CEO Michael Sonnenshein could escalate his ongoing struggle to get SEC approval for converting the firm’s flagship Bitcoin Trust (GBTC) into an ETF by taking recourse to the courts. In a Bloomberg interview the reporter asked whether Grayscale would consider an APA lawsuit if the SEC rejected its October 2021 application. “I think all options are on the table come July,” Sonnenshein replied. (CryptoNews)

In December 2021, the SEC put off a decision on the application saying it needed more time. About 95% of respondents said they were in favor of the change when the SEC opened the issue to public feedback in February.

On its website, Grayscale exhorts investors to submit their comments to the regulator. “To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting “physically-backed” or Spot Bitcoin ETFs,” it writes. “If you’ve been waiting for the familiarity and protections of a Bitcoin ETF, we believe you should not be forced into a Futures-based product simply because it’s the only one that exists.”

“The Grayscale team has been putting the full resources of our firm behind converting GBTC, our flagship fund, into an ETF,” Sonnenshein said in the Bloomberg interview. “It’s really important that investors know that we have and will continue to advocate for them.”

Grayscale’s charge: SEC is “vague and discretionary”

In December 2021, the SEC rejected a spot bitcoin ETF application by VanEck.

Fearing that the same grounds could be used to reject its own application, Grayscale shot off a 15-page legal missive to the SEC via law firm Davis Polk & Wardwell LLP, arguing that it would be untenable for the regulator to deny its application to list the Bitcoin Trust (BTC) on the NYSE Arca.

“While permitting the listing and trading of Bitcoin futures ETPs without requiring any showing that investors in such products are insulated from the risks of fraud and manipulation in the underlying Bitcoin market, the Commission has continued to apply its vague and discretionary Section 6(b)(5) standard to deny listing approval to the spot Bitcoin ETPs pursuant to Rule 19b-4,” Grayscale wrote.

“The Commission has not offered any meaningful explanation for its differential treatment of these competing products—and the irony that the successful ETPs invest in the very same CME futures market that has failed to qualify as a “significant market” in the Commission’s Rule 19b-4 analysis has gone unacknowledged.”

On the Bloomberg interview, Sonnenshein was confident: “It’s a matter of when, not a matter of if, a spot Bitcoin ETF is approved,” he said.

Related Story: Grayscale Launches Solana Trust, Protests SEC Rejection Of VanEck Spot Bitcoin ETF

Image of Michael Sonnenshein: Flickr