• Grayscale Investments LLC participated in oral arguments before the U.S. Court of Appeals for the DC Circuit, concerning their attempt to convert their popular Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF).
• The judges questioned the SEC about the differentiation between a futures ETF and a spot bitcoin ETF, and pushed them to provide evidence to explain their decision making.
• The full record of the questioning can be found online.
Grayscale Argues Against SEC
Grayscale Investments LLC participated in oral arguments on Tuesday in the United States Court of Appeals for the DC Circuit in relation to its attempts to get its popular Grayscale Bitcoin Trust (GBTC) converted to a spot bitcoin exchange-traded fund (ETF). In these oral arguments, the three presiding judges seemingly sided with Grayscale in their positioning.
SEC Denied Previous Attempts at ETF
The U.S. Securities and Exchange Commission (SEC) has repeatedly denied previous attempts at the introduction of a spot bitcoin ETF. This has led to Grayscale suing the SEC, alleging that the decisions have been arbitrary and inconsistent with the Commission’s decision to approve Bitcoin futures ETFs.
Judges Prod SEC About Differentiation
In today’s arguments, presiding judges Chief Judge Sri Srinivasan and Judge Neomi Rao continually prodded the SEC Senior Counsel Emily Parise about the SEC’s differentiation between a futures ETF and a spot bitcoin ETF. “[The prices] move together 99.9% of the time. So where’s the gap, in the Commission’s view?” asked Judge Rao. The SEC response was that correlation does not equal causation, with its lawyers explaining that the key empirical question is whether fraud and manipulation in the spot markets affect futures in the same way so that they can rely on surveillance of future markets.
SEC Must Provide Evidence
Without that missing empirical piece,the SEC counsel said,the agency can’t be sure it can rely on CME future surveillance to approve a spot ETF . Questioning led to pontification thatthe SEC had not provided sufficient evidence to explain their decision making ,with Judge Rao telling Parise , “TheSEChasnotofferedanyexplanationthatthepetitioners are wrong.”
Listen To Full Record Of Questioning Online
The full record of questioningcan be listenedto here