In its letter, Grayscale argues that Volatility Shares ETF is an "even riskier investment product" than its spot Bitcoin ETF.
Grayscale, a leading digital asset manager, is taking the US Securities and Exchange Commission (SEC) to task over the refusal of their application for a spot Bitcoin ETF, using a recent decision as possible leverage for their cause.
On July 10th, Grayscale's attorneys alerted the US Court of Appeals in the District of Columbia Circuit about the SEC's approval of Volatility Shares Trust's Bitcoin futures ETF.
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This fund, tied to Bitcoin futures and not spot Bitcoin, began its trade cycle on June 27th without SEC opposition. This move from the SEC comes as the agency has not yet given the green light to any spot Bitcoin ETFs, an issue that is drawing Grayscale's ire.
Grayscale argues that the Volatility Shares ETF offers an "even riskier investment product" than a Bitcoin futures ETF, presenting the SEC with an alternative perspective to consider its own proposal. This suggestion stems from the company's legal battle with the SEC, which ignited following the SEC's rejection of Grayscale's request to transition its Grayscale Bitcoin Trust to a spot Bitcoin ETF.
In the letter to the court of appeals, Grayscale stated:
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. The 2x Bitcoin Strategy ETF is therefore exposed to even more risks of the Bitcoin markets than Grayscale’s proposed spot Bitcoin ETP.
The company further emphasized that the only practical way to eliminate the unfair "treatment of Bitcoin-based ETPs is to allow proposed spot Bitcoin ETFs like Grayscale's to begin trading."
In the landscape of spot Bitcoin ETFs, Grayscale isn't the only player striving for SEC approval. Many other firms have put forward their applications to the SEC. These firms include globally renowned entities such as ARK Investment Management and BlackRock. However, these applications have faced scrutiny by the SEC, which stated that the filings lacked clarity and thoroughness.
Grayscale is leveraging a recent SEC decision as potential support for its spot Bitcoin ETF. The outcome of this legal challenge could set a new precedent in the treatment of Bitcoin ETFs by the SEC.
