ETF Was GBTC’s Ultimate Goal; Grayscale’s Only Option Was To Sue SEC

  • Judge Neomi Rao’s ruling compels SEC to reevaluate Grayscale’s spot Bitcoin ETF application.
  • Michael Sonnenshein, Grayscale’s CEO, emphasized long-standing intention to evolve GBTC into a Bitcoin ETF.
  • Grayscale’s journey over nine years aims to transition to an ETF structure for Bitcoin accessibility.

With the recent ruling made by Judge Neomi Rao on the Grayscale case against the SEC, the regulator is now compelled to reevaluate its stance on the application for a spot Bitcoin exchange-traded fund (ETF) by Grayscale.

Earlier this year, in an interview on the “Unchained” podcast, Michael Sonnenshein, CEO of Grayscale Investments, emphasized the long-standing intention for the Grayscale Bitcoin Trust (GBTC) to evolve into a Bitcoin ETF. He stated:

“An ETF was the ultimate goal for GBTC… An ETF format was what we always conceived of and that’s always what we intended to do even before we launched the product back in 2013.”

Furthermore, Sonnenshein clarified that Grayscale has been on a journey over the past nine years, providing Bitcoin accessibility to investors through a regulated way, with the ultimate goal of transitioning to an ETF structure.

The SEC’s denial of GBTC’s ETF application, as Sonnenshein pointed out, was a setback. According to the CEO, the SEC is “shutting the door on the opportunity to take the world’s largest Bitcoin fund and bring it closer into the regulatory perimeter.” “It left us no option,” he added as Grayscale decided to take legal action against the SEC.

Grayscale Investments, which manages the world’s largest crypto fund, applied to turn its flagship bitcoin fund, GBTC, into an ETF in October 2021. However, in June 2022, the SEC denied the listing due to concerns about fraud prevention and market manipulation.

Consequently, the Grayscale filed a petition for review with the federal appeals court for the District of Columbia, asking it to reasses the agency’s denial. The lawsuit challenges the SEC’s decision and asserts that the regulator treated Bitcoin Futures ETFs and Bitcoin spot ETFs disparately.

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