SEC Approves Volatility Shares’ Investment Vehicle: Grayscale Lawyers Advocate for ETF Expansion

Digital asset management firm Grayscale is intensifying its legal battle with the U.S. Securities and Exchange Commission (SEC) over the rejection of its spot Bitcoin exchange-traded fund (ETF) application. In a recent development, Grayscale’s legal team has pointed to a potential precedent that could bolster its case.

In a letter filed on July 10 with the U.S. Court of Appeals for the District of Columbia Circuit, Grayscale highlighted the approval of Volatility Shares Trust’s leveraged Bitcoin futures ETF. This investment vehicle commenced trading on June 27 without encountering any intervention from the SEC. While the regulatory body has thus far withheld approval for spot crypto ETFs, it has given the green light to those linked to Bitcoin futures.

Grayscale contends that the Volatility Shares ETF exposes investors to an “even riskier investment product” compared to Bitcoin futures ETFs. This observation suggests a potential avenue through which the SEC could approve Grayscale’s offering. The asset manager initiated its legal challenge against the SEC in June 2022 after the commission rejected its application to convert the Grayscale Bitcoin Trust into a spot Bitcoin ETF.

Grayscale emphasized the disparate treatment of spot Bitcoin ETFs and Bitcoin futures ETFs by the SEC. “The fact that the Commission has allowed a leveraged Bitcoin futures ETP to begin trading demonstrates that the Commission continues to arbitrarily treat spot Bitcoin ETPs differently than Bitcoin futures,” stated Grayscale. The firm argued that its proposed spot Bitcoin ETF, unlike the 2x Bitcoin Strategy ETF, would face even more risks in the Bitcoin markets.

According to Grayscale, the only solution to rectify the SEC’s unequal treatment of Bitcoin-based exchange-traded products (ETPs) is to permit spot Bitcoin ETPs, such as Grayscale’s, to commence trading.

Various firms, including BlackRock and ARK Investment Management, have submitted applications for spot crypto ETFs to the SEC. In response to a June report by SEC officials claiming that the filings lacked clarity and comprehensiveness, some of these applications have been resubmitted, now including crypto exchange Coinbase as a surveillance partner.

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Αρθρογράφος: Dimitrios Alexandridis

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