Grayscale Investments’ CEO explains that the U.S. Securities and Exchange Commission (SEC) could potentially violate the Administrative Procedure Act by not approving a spot bitcoin exchange-traded fund (ETF).
SEC Approving Spot Bitcoin ETF Is ‘a Matter of When and Not If’
Two different types of Bitcoin futures ETFs have been approved by the U.S. Securities and Exchange Commission. It has led to optimism within the crypto sector that the securities regulator is getting closer to approval of a spot bitcoin ETF.
This structure is the first to use the Investment Company Act of 1940, also known as 40 Act. The Act has been filed with the majority of bitcoin futures ETF proposals to date. This second structure uses the Securities Act of 1933 (33 Act). This structure was used to approve the Teucrium Bitcoin Futures ETF earlier in this month.
Grayscale Investments CEO Michael Sonnenshein explained to CNBC last week: “From the SEC standpoint, there were several protections that 40 Act products have that 33 [Securities Act of 1933] products don’t have, but never ever did those protections address the SEC’s concern over the underlying bitcoin market and the potential for fraud or manipulation.”
He continued: “So the fact that they’ve now evolved their thinking and approved a 33 Act product with Teucrium really invalidates that argument and talks to the linkage between the bitcoin futures and the underlying bitcoin spot markets that give the futures contracts their value.” Sonnenshein opined:
If the SEC can’t look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation.
Administrative Procedure Act, (APA), regulates federal agencies’ development and publication of regulations.
Grayscale applied to the SEC last October 19th for permission to transform its bitcoin trust (GBTC), into a bitcoin ETF. GBTC is Grayscale’s largest product with almost $26 billion in assets under management as of April 15. If approved by SEC, GBTC would be listed on OTCQX and the New York Stock Exchange.
The SEC will respond to the company in July regarding whether or not the filing was approved. If the SEC does not accept the GBTC conversion, the CEO suggested that the company could sue the SEC.
Sonnenshein commented on the SEC’s approval of a spot bitcoin ETF.
It is really a question of when, not if.
Is it possible that the SEC could soon approve a spot Bitcoin ETF? Please leave your comments below.
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