Grayscale Threatens SEC with Legal Action: An Expert’s Comment

Grayscale Investments, the world’s largest digital assets fund manager, is threatening legal action against the US Securities and Exchanges Commission (SEC).

According to Grayscale CEO Michael Sonnenshein, that could be the route for the asset manager should the SEC reject its application to convert its Bitcoin Trust (GBTC) product into a spot Bitcoin exchange-traded fund (ETF).

In an interview on Monday, Sonnenshein confirmed the firm had looked at the lawsuit as an option.

An Expert’s comment

Daniele Casamassima, the CEO of fintech platform Pure, agrees that Grayscale’s move is informed by the SEC’s continued rejection and/or delays around Bitcoin spot ETF proposals. This, he notes, has been the trend even after the agency approved the first futures-backed Bitcoin ETFs in the US.

“The main problem with SEC is not allowing ETFs on spot markets but only on derivatives. When it comes to spot markets, you know for sure they will reject your request,” Casamassima told Invezz in emailed comments.

But he thinks the SEC’s concerns are still valid, especially given a spot ETF comes with one “main problem”- how to verify the source of funds.

“When you trade with the instruments of derivatives markets, you still need to buy it with real cash and then trade the difference. That’s why SEC is still not allowing them,” the former financial advisor at Milan-based IW Bank added.

A spot Bitcoin ETF will be approved, it’s ‘when, not if’

While Grayscale continues to wait on SEC’s next move, the sentiment across the crypto industry is that approval will come - eventually.

It’s a general agreement also shared by Grayscale’s Sonnenshein, who told Bloomberg on Monday that it will “ultimately” be a matter of when and not if for a spot Bitcoin ETF.

Casamassima thinks that’s precisely the case, noting that another rejection might not change the eventuality of this.