- Grayscale is suing the Securities and Exchange Commission after the US regulator rejected its spot bitcoin ETF bid.
- The SEC said Wednesday the crypto investment firm had failed to answer questions on market manipulation.
- Grayscale filed its bitcoin ETF application in October 2021 but it has faced multiple delays.
Grayscale Investments has announced its intention to sue the Securities and Exchange Commission after the US regulator rejected its proposal to list a spot bitcoin ETF.
Just an hour after the SEC rejected Grayscale's ETF bid, the digital asset manager announced it had started the litigation process to appeal the decision by filing a petition with the US Court of Appeals.
"Today, we received notice that our application to convert GBTC to a spot ETF was denied by the SEC," Grayscale, that manages the world's largest bitcoin fund, said in a statement Thursday. "We are deeply disappointed by and do not agree with its decision."
An ETF, or exchange-traded fund, is an investment sector that tracks a specific sector, asset class, or theme. In October 2021, Grayscale applied to convert its Grayscale Bitcoin Trust ETF (GBTC) into a fund that would track the spot price of bitcoin.
While the SEC is yet to approve a spot bitcoin ETF, they've previously allowed ETFs that track bitcoin future contracts to list on US exchanges. Grayscale's lawyers said this was an inconsistent approach to regulation of the crypto sector.
"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," they said.
The SEC said in its Wednesday filing that it had rejected Grayscale's bid because the investment manager had failed to answer questions about market manipulation. It also rejected Bitwise's application to list a spot bitcoin ETF.