Grayscale May Sue the SEC Over ETF Rejections

Digital asset management giant Grayscale may take legal action against the U.S. Securities and Exchange Commission (SEC) for its repeated rejections of proposed exchange-traded funds (ETFs).

Speaking in an interview with Bloomberg News, Grayscale CEO Michael Sonnenshein said that in the event that the SEC rejects its application to convert its Bitcoin Trust (GBTC) product into an ETF, all options would be considered to reverse the decision.

“I think all options are on the table. I think certainly it’s important that between now and the end of that 240-day process which ends in early July that the SEC hears from as many investors as possible, as well as academics, policymakers...Everybody has an opportunity to weigh in on these issues, and all of that is in fact considered as the SEC weighs the issue in front of us.”

Sonnenshein said that while Chair Gensler and the SEC have gotten the ball rolling on some aspects of regulatory clarity, such as the approval of Bitcoin futures ETFs, the agency isn’t doing enough to create a friendly crypto environment for US investors.

“GBTC today has been traded since 2015 and it’s been an SEC-reporting company since January of 2020,” he said.

“So every single day that it is trading and being bought and sold by investors and is not being folded into the familiarity and the protection of the ETF wrapper, we really don’t feel that the SEC is doing everything they can to actually protect investors."

The CEO said that the two things that Grayscale is looking for from the SEC are:

“GBTC can move up to a national exchange like the New York Stock Exchange (NYSE), and then could also have that simultaneous creation and redemption process that would keep the shares trading in line with its net asset value.”

Sonnenshein asserted his stance that legal action would be possible when he tweeted out the interview to his followers:

Last month, Grayscale announced the launch of a campaign to encourage American investors to post their comments on the company’s application for an ETF.

“This campaign aims to educate and inspire the investment community to take action and make their voices heard on this historic decision,” Sonnenshein said.