Grayscale Bitcoin Fund backed by Blockchain Association in SEC Battle
The Blockchain Association has issued a brief to the courts outlining the main arguments in favor of a spot Bitcoin exchange-traded product (ETP) from Grayscale.
Last week, crypto-asset fund manager Grayscale submitted its opening lawsuit to a US appeals court. The appeal challenges the decision by the Securities and Exchange Commission (SEC) to deny the conversion of the Bitcoin Trust Fund (GBTC) to a spot Bitcoin ETF.
This week, the company received support from the Blockchain Association, which filed its own amicus brief on October 18.
“By denying access to view bitcoin ETPs, the SEC is engaging in an arbitrary and capricious practice of picking winners and losers among investment products,” said the association’s policy counsel Marisa Tashman Coppel.
SEC Bitcoin Double Standard
The Blockchain Association is an organization dedicated to improving public policy for crypto networks. Members include industry leaders, lawyers, research firms, security firms and venture capital firms.
The association’s head of policy, Jake Chervinsky, supported the move. He hopes that will help the court see the “unfair and illegal double standard that the SEC has applied to bitcoin for all these years.”
The brief claims that the SEC has violated its own mandate to ensure that “investors are free to choose products that best suit their goals and have the necessary information to make well-informed decisions.”
Furthermore, the Norwegian Financial Supervisory Authority has not established significant differences between a Bitcoin futures-based ETP and a spot fund.
Coppel cited a physical-backed palladium fund with the same market size and risk as Bitcoin that the SEC has approved. The regulator’s inconsistent approach to investment products appears to be part of its extrajudicial targeting of the crypto industry. This sentiment was also pointed out by Republican Senator Tom Emmer earlier this year. Coppel concluded that the SEC is not playing by its own rules:
“Clearly, the SEC has no basis to treat spot bitcoin products differently than bitcoin futures products. By doing so, the SEC has abandoned its investor protection mandate.”
Grayscale Bitcoin fund discount deepens
The fund in question is the largest institutional Bitcoin fund on the market, with assets under management of $12.4 billion. However, it is currently trading at a record low discount to net asset value of -35.8%, according to Ycharts.
So far this year, the fund has weakened by 67% as the bear market drives BTC prices lower.
Bitcoin prices, meanwhile, have fallen 1.9% on the day to trade at $19,215 as consolidation continues.
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