Grayscale filed a petition with a federal appeals court Wednesday after the Securities and Exchange Commission denied a request to list a Bitcoin-centric fund on the stock exchange, saying the proposed fund did not meet investor protection requirements and it lacked sufficient safeguards against fraud and manipulation. The company wanted to list its Grayscale Bitcoin Trust (GBTC) fund on the New York Stock Exchange’s Arca trading platform as an exchange-traded fund, an investment fund that tracks the movements of specific assets, often focused on a particular sector.
The crucial point of the argument is that the SEC “is failing to apply consistent treatment to Bitcoin investment vehicles as evidenced by its denial of GBTC’s application for conversion to a spot ETF, but approval of several Bitcoin futures ETFs.” according to a letter to investors released after the ruling.
The company said the legal move was requested due to the SEC’s “arbitrary and capricious actions and discriminatory treatment of issuers”.
The SEC has rejected several similar claims to Grayscale in recent months, including those from Fidelity, First Trust, and SkyBridge Capital. Grayscale further argues that the SEC’s decision is inconsistent with previous decisions allowing the listing of several ETFs linked to Bitcoin futures contracts. “If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold the same asset,” the company said.
