By Michelle Price
WASHINGTON (Reuters) – Grayscale Investments on Tuesday urged the U.S. Securities and Exchange Commission (SEC) to quickly approve its proposed exchange-traded fund that would track bitcoin, following the crypto asset manager’s court victory against the agency.
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A three-judge panel of the District of Columbia Court of Appeals in Washington last week ruled that the SEC was wrong to reject Grayscale’s proposed bitcoin ETF without explaining its reasoning, in a case that has been closely watched by the industry and which briefly boosted the price of bitcoin nearly 7%.
The ruling requires the SEC to review Grayscale’s application, although the agency still has time to appeal the court’s decision. The SEC said last week that it was studying the ruling.
“We hope you will agree that the best use of resources now is for the (SEC) to issue an order approving” the product, Grayscale’s law firm DavisPolk wrote in a letter which was filed with the SEC on Tuesday.
A spot bitcoin ETF would give investors exposure to the world’s largest cryptocurrency without having to own it. The SEC has denied all spot bitcoin ETF applications, saying applicants have not shown they can protect investors from market manipulation.
It has, though, approved bitcoin futures ETFs based on a market surveillance arrangement with the Chicago Mercantile Exchange, where most bitcoin futures trade. Grayscale argued the same setup should be satisfactory for its spot ETF, since both products rely on bitcoin’s underlying price.
The appeals court ruled that the SEC arbitrarily denied Grayscale’s application because it never explained why the two arrangements were materially different.
“If any other reason could be offered in attempting to differentiate” the two types of products “we are confident that it would have surfaced by now,” DavisPolk wrote.
(Reporting by Michelle Price; Editing by Tomasz Janowski)
