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Grayscale sues SEC after being denied a spot bitcoin ETF conversion
Experts believe a spot bitcoin ETF might be available as early as this year.
The optimism comes after the Securities and Exchange Commission approved the Teucrium Bitcoin Futures ETF application earlier this month. The fund was registered under the Securities Act of 1933, rather than the Investment Company Act of 1940, as other prospective bitcoin funds have done, such as Grayscale's Bitcoin Futures ETF.
"There were various protections that 40 Act products had that 33 Act products don't have," Grayscale Investments CEO Michael Sonnenshein said last week on CNBC's "ETF Edge."
"So the fact that they've now altered their thinking and approved a 33 Act product with Teucrium actually invalidates that argument and speaks to the connectivity between bitcoin futures and the underlying bitcoin spot markets that provide the futures contracts their value," says the author.
An independent board, as well as accounting and custody requirements, are among the safeguards, he added.
According to Sonnenshein, "it's truly a matter of when, not if" there will be a bitcoin spot ETF. "It is, in fact, potentially grounds for an Administrative Procedure Act violation if the SEC can't look at two similar issues, the futures ETF and the spot ETF, through the same lens."
Grayscale is waiting for the SEC to make a decision on whether or not to convert its Grayscale Bitcoin Trust into a bitcoin ETF in early July. Sonnenshein has threatened to sue the agency if they are denied.
While Grayscale's CEO has been one of the most vocal critics of the SEC, he is far from alone.
The SEC is opposing due to concerns about manipulation, although Bitwise Asset Management's Matt Hougan claimed in the same interview that the SEC's explicit request was to establish that regulated CME markets are of significant scale.
"Bitcoin is now a market for institutions." It's a market with institutional service providers, institutional investors, and a huge and well-regulated futures market," Hougan, the firm's chief information officer, explained.
"We were able to get the bitcoin futures ETF approved under the 40 Act." The bitcoin futures ETF has been approved under the 33 Act. "The next stage is to create a spot bitcoin ETF that provides pure exposure to bitcoin, which is exactly what consumers want," he said.
A increasing percentage of financial advisors are interested in investing in a bitcoin ETF, according to ETF Trends CEO Tom Lydon.
According to a survey conducted by Bitwise/ETF Trends in 2022, 82 percent of advisers prefer a spot bitcoin ETF over a futures-based option. The demand for bitcoin goods that can be purchased through traditional brokerage platforms has also surged, according to Lydon, who spoke on the same panel. There aren't many options right now, so it's not going backward, he noted.
The Securities and Exchange Commission (SEC) declined to comment.
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