The problem has also become “a kind of hot potato”, Ms Fuhr said. Following the SEC’s decision, Grayscale Investments filed a lawsuit against the SEC on June 29 in the United States Court of Appeals for the District of Columbia Circuit. The case could take years, and even if the court decided it in favor of Grayscale, an appeal would likely follow, she said.
“So getting an actual decision based on going to fight in court seems like a clumsy way to go about it,” she said.
Todd Rosenbluth, head of research at VettaFi LLC, a data and analytics provider, said the SEC under Chairman Gary Gensler — who was sworn in last year — has repeatedly cited concerns about fraud and manipulation of cash bitcoin as well as insufficient investor protection. that there is a spot bitcoin ETF.
“And so, until the direction of the SEC changes or the facts change, and asset managers are able to allow that there are sufficient protections for investors, I think any proposed launch of a bitcoin ETF at the price of being rejected,” Mr. Rosenbluth said.
As for Grayscale’s decision to sue the SEC, Rosenbluth said he would agree that Grayscale is “taking an inappropriate approach” in its attempt to achieve its goal of converting the Grayscale Bitcoin Trust into a bitcoin ETF. in cash.
The Grayscale Bitcoin Trust, which has assets under management totaling $14.5 billion, began operations in September 2013 and has been intentionally structured since inception to eventually convert into an ETF pending approval from US regulators. according to information available on the Grayscale website.
Grayscale has strived to work “collaboratively and proactively with the regulatory community,” CEO Michael Sonnenshein said in an interview.
“And certainly, through the prism of acting as trustees, (we) have continued to act in an educational capacity with the regulatory community, policy makers, etc.,” he said, adding that the efforts of Grayscale have spurred “a ton of movement in Washington” around engagement on crypto-related issues.
Grayscale argued on behalf of investors because it knows converting to an ETF would provide investors with greater protection. The fund is held by nearly one million investor accounts in the United States across all 50 states, he said.
Since investor protection is a core SEC principle, the fact that the Grayscale Bitcoin Trust ruling was negative meant that “the only natural next step in pursuing what we want for our investors is to bring before the court system,” Mr. Sonnenshein said.
“It’s a process that has just started very recently, but in which we have confidence,” he said.
Grayscale was guided by his attorney to believe the trial could be “a nine to 12 month process, maybe shorter, maybe a little longer,” he said.
Regulators like the SEC “carried on,” Sonnenshein said.
“These lawsuits are not decisions we take or other consummations lightly,” he said. “But these are actually quite common occurrences.”
The five SEC commissioners, who are appointed by the president with the consent of the Senate, serve staggered five-year terms. The President and Commissioners may continue to serve for approximately 18 months after the expiration of the term if not replaced before that date. No more than three commissioners can belong to the same political party.