Grayscale vs SEC: Coinbase Backs up Grayscale's ETF

The crypto exchange empire, Coinbase filed an amicus brief in support of Grayscale in its lawsuit with the SEC.
Grayscale called the SEC’s decision to reject the conversion of its Grayscale Bitcoin Trust (GBTC) into spot Bitcoin ETF as “discriminatory.”

Grayscale investments revealed in a tweet on October 19 that The Blockchain, The Chamber of Digital Commerce, The Chamber of Progress, and the Coin Center filed for an amicus brief in support of the Grayscales ETF against the Securities and Exchange Commission.

Grayscale Bitcoin Trust (GBTC) is the world’s largest Bitcoin fund. It’s also the first-ever publicly traded trust that has a digital currency as its underlying value. Coinbase, the largest U.S.-based cryptocurrency exchange, trades more than 150 cryptocurrencies dived in and filed an amicus brief supporting Grayscale.

Grayscale Investment’s application joins a dozen more firms’ applications that have been declined. One of the applications is that of WisdomTree which cited a lack of investor protections and the potential for fraud and manipulation.

Investors deserve the right to choose how they access their $BTC. We’re thankful for the support of the @BlockchainAssn as we work to make this ideal into a reality. $GBTC https://t.co/vpPpyjScdK

— Grayscale (@Grayscale) October 18, 2022

Despite the SEC turning down several spot ETF applications, on the other side, several bitcoin futures ETFs have been given the green light. The distinction has seen Grayscale lawyers come out terming it as “arbitrary” and “outside the Commission’s authority.”

According to the amicus brief, the companies that represent a swath of the crypto industry urge the SEC to re-evaluate the rejection and approve the spot for Bitcoin ETF for public use.

The SEC has approved several Bitcoin futures ETFs but it continues to reject all spot Bitcoin ETF applications.

Michael Sonnenshein, CEO of Grayscale Investments, said SEC action to treat the Bitcoin futures ETF and Bitcoin spot ETF disparately violates the APA rule.

Crypto investors freely trade cryptocurrencies Ethereum (ETH) through the available options such as crypto exchanges. Organizations strongly hold the belief that ETP not only helps in investor protection but also investors gain exposure to Bitcoin (BTC) or Ethereum indirectly.

In addition to this, Bitcoin futures ETPs and spot Bitcoin ETPs drive value from the same underlying Bitcoin market.

Investors have shown interest in owning products that offer exposure to Bitcoin. Therefore, risks have been disclosed in the products and investors may decide whether they want to take the risks or not.