In the Grayscale vs SEC case, court judges seem to favour Grayscale and are trying to bring more clarity on the requirements to approve Bitcoin spot ETFs applications.
Grayscale is a popular digital assets fund management company. The Digital Currency Group (DCG) is the parent company behind this fund manager. Since early 2022, Grayscale is eagerly waiting for approval to change its GBTC product into a Bitcoin spot ETFs product. In the mid of 2022, the United States Securities and Exchange Commission (SEC) rejected Grayscale’s Bitcoin spot ETFs application. In return, Grayscale sued the SEC agency over approving Bitcoin futures ETFs products but not Bitcoin spot ETFs. At that time Grayscale CEO said that future ETFs are riskier than ETFs but still the SEC agency favoured Futures ETF applications only.
In the latest court hearing, Grayscale lead counsel Don Verrilli said that the rejection of the Grayscale spot ETFs applications by the SEC agency was arbitrary because there is no difference between Bitcoin spot ETFs & Bitcoin futures ETFs, as both of these two things operate on behalf of the spot trade price of Bitcoin.
Further Grayscale’s lead counsel said that Grayscale wants to be more regulated & provide highly regulated product services to the customers.
The SEC lawyer Emily Parise said that Grayscale’s argument is an “unsupported empirical leap” and the 99% correlation between the spot and futures markets does not prove causation. Parise argued that the onus to prove causation lay on Grayscale and that the company had not provided sufficient “data” to alleviate its concerns.
Judge Neomi Rao clearly said that Grayscale firm provided sufficient information to explain that Bitcoin spot ETFs & Bitcoin futures ETFs are much similar but still they faced rejection from the SEC agency, so now SEC has to explain why they (Grayscale) are wrong in the evidence that they have proffered”
Further Judge asked how the SEC body approved Bitcoin spot ETF applications but they are failing to apply the same test on crypto spot ETFs.
The whole discussion explained that Bitcoin futures ETFs are dependent on the spot price of Bitcoin but here the SEC body never considered any kind of price manipulation risks but they are considering the same risk in the case of Bitcoin spot ETFs.
The court judge said:
“What’s the logic behind it?”