Grayscale, the largest Bitcoin fund in the world, in its legal dispute with the Securities and Exchange Commission, is receiving support from Coinbase, the largest cryptocurrency exchange in America (SEC).
In response to the federal regulator’s refusal to accept Grayscale’s application for a Bitcoin ETF or any other application. The SEC’s willingness to approve some Bitcoin futures ETFs but unwillingness to permit spot market ETFs to proceed, according to the fund, shows that the SEC has “failed to apply consistent treatment to similar investment vehicles.”
The business is suing in response to the federal regulator’s refusal to accept Grayscale’s application for a Bitcoin ETF or any other application. The SEC’s willingness to approve some Bitcoin futures ETFs but unwillingness to permit spot market ETFs to proceed, according to the fund, shows that the SEC has “failed to apply consistent treatment to similar investment vehicles.”
A similar point was made in Coinbase’s amici curiae brief, which was submitted on Tuesday to the U.S. Court of Appeals for the District of Columbia.
“Both spot and future [exchange-traded products], whether tied to Bitcoin or other commodities like gold, platinum, or palladium, create the same investment exposure for investors,” argued the exchange. “Both products are designed to track the price of the underlying commodity, Bitcoin.”
With the use of an ETF, investors can obtain exposure to a given asset without having to buy and hold the underlying asset directly. For instance, a Bitcoin ETF would make it possible for investors to indirectly purchase Bitcoin without having to purchase it from an exchange and store it in a digital wallet.
The same objective is essentially accomplished by both spot market ETFs and futures, albeit in different ways. A spot market ETF would directly back its shares with Bitcoin, as opposed to a futures ETF, which monitors the price of derivative contracts, which themselves allow traders to bet on the future price of Bitcoin.
To the contrary, Coinbase said in its brief that the SEC is “engaging in an arbitrary and capricious practice of picking winners and losers among investment products.” by preventing Bitcoin spot ETFs from entering the market.
The Blockchain Association, the Chamber of Digital Commerce, the Chamber of Progress, and the Coin Center were among the numerous crypto-focused non-profits that were included in the brief as amici curiae.
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