Grayscale Feels that its Lawsuit Has Reached A “Key Milestone”

• Grayscale sued the Securities and Exchange Commission (SEC) as it didn’t allow it to convert GBTC into an ETF. 
• Grayscale vs. SEC lawsuit indicates that Grayscale wants to convert the closed-end fund into an ETF/ETN.

Grayscale shared an unofficial transcript of oral arguments in its lawsuit challenging the SEC’s denial. According to its transcript, on March 7, Grayscale’s lawsuit challenged the SEC’s denial of its application to convert Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF that reached a “key milestone.”

Grayscale’s Unofficial Transcript

The unofficial transcript was prepared by Grayscale, while the timelines for a final decision from the D.C. Circuit Court of Appeals are “inherently uncertain.”

The Grayscale appeal challenges the SEC order disapproving an exchange’s request to list an exchange-traded product that holds Bitcoin as its underlying asset. Don Verrilli, Grayscale’s Petitioner, stated, “the fundamental problem with the order is that it contradicts previous SEC orders giving the green light to Bitcoin futures ETPs with the same risk of fraud and manipulation.”

Verrilli said, “Disapproval leaves the investors in a situation in which trading will continue on an over-the-counter market largely unregulated, and therefore they are less protected.”

In the court, Emily True Parise for the SEC said that “the Commission’s order should be upheld because it was the product of reasoned decision making.” She also thinks “the Commission clearly laid out one way they could meet their burden.”

Notably, Grayscale’s oral arguments in this lawsuit went down very well. Still, the tensions around deposit safety again cast Bitcoin in a favorable light.

As per the media report, the judges appear sympathetic to the Grayscale statements that its application for a spot Bitcoin ETF hasn’t treated apples to apples. If Grayscale won the lawsuit against SEC, this could lead to a spot ETF being approved. Meanwhile, if GBTC converted into an ETF, it would close the deep discount to the net asset value. Still, a spot Bitcoin ETF could be a crucial path for Bitcoin itself. The recent U.S. banks collapse helps to win back some sympathy for the cryptocurrencies.

There were also some clear business bonuses, as converting GBTC into an open-ended product would build the largest U.S.-based product. This is also an easier way to hold or trade for many investors. The FTX collapse last year in November set the crypto industry back. In particular, it doesn’t help Grayscale with its lawsuit against the SEC.

The recent banking turmoil and the acquisition of Credit Suisse (CS) by rival UBS (UBS) won’t have escaped anyone’s attention. Bitcoin’s popularity was likely a product of the Great Financial Crisis and the widespread unhappiness about banking. That sentiment is becoming more prominent as banks are blowing up once more. That is also reflected in the recent Bitcoin (BTC) price action.

Nancy J. Allen

Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.