Grayscale says U.S. SEC set bar too high for Bitcoin funds
The U.S. Securities and Exchange Commission, according to Grayscale Investments, set the bar too high for spot bitcoin exchange-traded funds, which have not yet been authorized for listing on U.S. exchanges.

The U.S. Securities and Exchange Commission, according to Grayscale Investments, set the bar too high for spot bitcoin exchange-traded funds, which have not yet been authorized for listing on U.S. exchanges.
After the SEC rejected Grayscale's request to convert its Grayscale Bitcoin Trust, the biggest bitcoin fund in the world, into an ETF for NYSE Arca listing, Grayscale filed a lawsuit against the agency in June.
According to the regulator, the plan did not adhere to the requirements set out to safeguard investors and avoid fraudulent operations.
The SEC has accepted a number of bitcoin futures-based ETFs while rejecting applications for more than a dozen spot bitcoin ETFs. The main grounds for rejection have been applicants' absence of contracts for surveillance-sharing with regulated markets in relation to the underlying assets of the spot funds. To enable the exchange to identify manipulation, such agreements provide for the disclosure of trading data and other information.
Although both kinds of funds are inherently linked to the price of bitcoin, Grayscale stated in the court filing that the SEC had not applied its requirements equally to spot bitcoin ETFs and bitcoin futures-based ETFs.
According to the company's submission, "there is only one logical conclusion to draw: the Commission is treating spot bitcoin ETPs with extra severity based on its judgment regarding the advantages of bitcoin as opposed to other forms of investments."
According to Grayscale, there is no spot bitcoin market that the SEC deems to be regulated. However, it claimed that the NYSE Arca and the Chicago Mercantile Exchange, where bitcoin futures are traded, have a surveillance-sharing arrangement.
Since both kinds of funds depend on the price of bitcoin, Grayscale argued that the SEC's determination that prior agreements with CME were adequate to prevent fraud in bitcoin futures-based ETFs should also apply to bitcoin spot ETFs.
In addition, Grayscale claimed that by rejecting alternative strategies for reducing the risk of fraud, the SEC exceeded its power.
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