Grayscale and the Securities & Exchange Commission (SEC) are now in a legal battle after the latter refused to approve the application for the Bitcoin ETF. According to claims by Grayscale, the lawsuit came to light after the SEC failed to apply consistent treatment to similar investment vehicles. While the SEC showed a green light to Bitcoin Futures ETF, the spot markets have been deprived of the luxury of getting regulated in the region.
Coinbase has come forward in support of Grayscale. The crypto exchange platform will be an amici curiae to the case with a constant lookout for Grayscale. Coinbase has filed a brief with the court levying the argument that spot ETFs are to be given the go-ahead just like future ETFs.
As per the argument by Coinbase, both products are designed to track the price of Bitcoin and create the same investment exposure for investors. The only difference between the two is that while futures ETF tracks the price of derivative contracts, spot ETF directly backs its shares with Bitcoin. An ETF is an investment vehicle that offers exposure to buyers without having to buy and hold the underlying asset.
Bitcoin ETF, the asset that sparked the entire argument, will give investors the power to invest without buying and storing it in their digital wallets. The futures market is regulated; however, the waiting period for the spot market does not seem to end any time soon. Gary Gensler, the SEC Chair, believes that the move provides a safety net to ordinary investors.
Even though it sounds fair, the point is that the Commission is limiting the investment options of people by restricting the reach of Bitcoin Spot ETFs. Coinbase has also argued that the SEC was picking winners & losers by engaging in a practice that is capricious & arbitrary.
Crypto exchanges worldwide, including the top crypto exchanges in Australia, follow the lawsuit closely. The final verdict could affect the trend in their respective regions and potentially limit their crypto traders’ investment options.
Other parties involved in the lawsuit as amici curiae are:-
- The Chamber of Digital Commerce
- The Blockchain Association
- Coin Center
- Chamber of Progress
The SEC, for now, looks to stand still on its previous reasoning where BEit was heard stating that ETF providers must form a surveillance-sharing agreement with a market that is regulated in significant size. Adding that it must be related to the tracking of underlying Bitcoin as a measure against market manipulation.
Countries that have already approved Bitcoin spot ETF products are Australia, Canada, Brazil, and Germany, to mention a few. However, Coinbase has used this information to argue that traders are being driven to those markets due to the restrictions imposed by the SEC on Bitcoin spot ETFs in the region.