Spot Bitcoin ETF: Grayscale’s chief legal officer says litigation could take up to 2 years

By:
on Jul 11, 2022
  • Grayscale sued the SEC in June after the regulator denied the firm’s spot Bitcoin ETF application.
  • The asset manager filed a Petition for Review at the DC Court of Appeal, bypassing the District Court.
  • Chief legal officer Craig Salm says the litigation could take between 12 months and 2 years to conclude.

Grayscale’s litigation process against the US Securities and Exchange Commission (SEC) over the regulator’s denial of a spot Bitcoin ETF could take as long as two years.

That’s according to the leading digital asset manager’s chief legal officer Craig Salm.

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Last month, the SEC denied Grayscale’s application to convert the Bitcoin Trust (GBTC) investment product into a spot Bitcoin ETF. 

The asset management firm immediately responded with a lawsuit against the US securities regulator, filing a Petition for Review in the US Court of Appeals for the D.C Circuit. According to Grayscale, SEC’s actions are in violation of the law, specifically the Administrative Procedure Act (APA) and Securities Exchange Act of 1934.

The firm points to the discrepancy in SEC’s rationale to allow a futures Bitcoin ETF and inverse Bitcoin ETF but not a spot one.

Timeline for the Grayscale vs. SEC lawsuit

The US market waits for a spot Bitcoin ETF, long after these products were approved in some other jurisdictions across the globe. The SEC’s denial of the Grayscale and Bitwise proposals was therefore another blow to a market that continues to believe it’s ripe for a spot exchange traded fund.

When then does Grayscale expect a decision from the court?

In a Q&A on the lawsuit, Salm notes that the litigation process consists of three key stages before the final decision: there’s briefings, then selection of judges, and oral arguments. The court’s verdict will then follow.

The litigation process can therefore be long. However, Grayscale’s move to the D.C Circuit Court of Appeals may probably shorten the timeline – Salm puts it to around one to two years.

We can’t be certain about timing, but based on how long federal litigation tends to take – including briefings, oral arguments, and a final court decision – it can typically take anywhere from twelve months to two years, but could be shorter or longer.”

Grayscale Chief Legal Officer Craig Salm in Q&A: Our Lawsuit Against the SEC

The Grayscale chief legal officer added that the firm is prepared to go all the way, noting that they believe they have a strong case against the SEC.

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