Grayscale’s Court Win Over SEC Lifts Hopes for Bitcoin ETF Approval
Futures Trading Commission. Asset management giant BlackRockapplied for a spot bitcoin ETF in June, kicking off another wave of applications and speculation that the SEC might reconsider its stance. Fidelity and Invesco are among the other asset managers that have applied.
Grayscale sued the SEC last year after the agency denied its application, arguing that the agency’s prior approval of bitcoin futures ETFs made its rejection of GBTC “arbitrary and capricious." It rallied thousands of investors to write comment letters in support of its efforts. Futures-based ETFs have a potential downside for investors because they must be continually rolled forward as the current month’s futures contracts expire and the ETF’s manager replaces them with contracts from the next available month. If the next month’s contract is more expensive than the current month’s contract, the roll process incurs a hidden cost for ETF investors.
Bringing cryptocurrency markets into compliance with longstanding federal regulations is a priority for Gensler, a veteran policy maker who previously taught a class on cryptocurrency at the Massachusetts Institute of Technology. He has said most cryptocurrencies in circulation are unregistered securities and has beefed up the SEC’s team of crypto enforcement attorneys. In June, the SEC sued Coinbase and Binance, the largest global crypto trading platform.
Gensler’s approach has had some obstacles. Last month, a federal judge ruled partially against the agency in a long-running court battle against Ripple Labs, whose XRP cryptocurrency the SEC alleges to be an unregistered security. The agency is seeking to appeal that ruling, which could undermine the SEC’s case against Coinbase and other trading platforms
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