Digital Assets: Spot Bitcoin ETF – Grayscale Warns SEC Is On Thin Ice

April 18, 2022 | Digital Assets, News
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CEO Sonnenshein claims the SEC could potentially violate the Administrative Procedure Act by blocking a spot bitcoin ETF.

The SEC may have put itself into an untenable position by approving a bitcoin ETF both under the the Investment Company Act of 1940 (40 Act) as well as the Securities Act of 1933 (33 Act). Grayscale Investments CEO Michael Sonnenshein said to CNBC last week that despite the SEC’s pre-occupations with the potential for fraud or manipulation in the underlying (spot) bitcoin market, it had gone ahead with approving Teucrium’s 33 Act bitcoin futures ETF. In his view, a 40 Act product had several protections that a 33 Act product did not have. (Bitcoin.com)

Grayscale: SEC cannot paint the spot and futures ETF with the same brush

“So the fact that they’ve now evolved their thinking and approved a 33 Act product with Teucrium really invalidates that argument and talks to the linkage between the bitcoin futures and the underlying bitcoin spot markets that give the futures contracts their value,” Sonnenshein asserted.

“If the SEC can’t look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation.”

 Grayscale has applied to the SEC for approval to convert the firm’s flagship Bitcoin Trust (GBTC) into an ETF. Sonnenshein has been previously vocal on the SEC’s seemingly biased attitude against approving a spot bitcoin ETF.

Last month, when a reporter asked him whether Grayscale would consider an APA lawsuit if the SEC rejected its October 2021 application, he said: “I think all options are on the table come July.”

Bitcoin ETF imminent

To CNBC last week he said in response to a question whether the SEC will approve a spot bitcoin ETF:

“It really is, in our opinion, a matter of when and not if.”

Related Story: Grayscale’s Sonnenshein Prepared To Take Legal Recourse If SEC Nixes GBTC’s ETF Conversion

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