Grayscale says U.S. SEC set bar too excessive for Bitcoin funds By Reuters

By Jody Godoy

(Reuters) – Grayscale Investments stated in a courtroom submitting Tuesday that the U.S. Securities and Trade Fee set the bar too excessive for spot bitcoin exchange-traded funds, which have up to now not been accredited for itemizing on U.S. exchanges.

Grayscale sued the regulator in June, after the SEC denied its bid to transform its Grayscale Belief, the world’s largest bitcoin fund, into an ETF for itemizing on Intercontinental Trade (NYSE:) Inc’s NYSE Arca change.

The regulator had stated that the proposal didn’t meet requirements designed to stop fraudulent practices and defend buyers.

The SEC has rejected over a dozen spot bitcoin ETF purposes, and accredited a number of bitcoin futures-based ETFs. The rejections have centered on candidates’ lack of surveillance-sharing agreements with regulated markets referring to the spot funds’ underlying property. Such agreements entail sharing commerce knowledge and different data to permit the change to detect manipulation.

Grayscale argued within the courtroom submitting that the SEC had not utilized its requirements evenly to identify bitcoin ETFs and bitcoin futures-based ETFs, though each varieties of funds are each essentially tied to the value of bitcoin.

“There is just one affordable conclusion to attract: the Fee is treating spot bitcoin ETPs with particular harshness primarily based on its opinion about bitcoin’s deserves as in comparison with different varieties of investments,” the corporate stated within the submitting.

There is no such thing as a spot bitcoin market that the SEC considers to be regulated, Grayscale stated. However the NYSE Arca had entered a surveillance-sharing settlement with the Chicago Mercantile Trade, the place bitcoin futures commerce, it stated.

Because the SEC deemed different agreements with CME adequate to stop fraud in bitcoin futures-based ETFs, the identical ought to apply to bitcoin spot ETFs since each varieties of fund depend on the value of bitcoin, Grayscale stated.

Grayscale additionally argued the SEC acted outdoors its authority by not accepting different technique of mitigating fraud threat.