June 30 (Reuters) - Grayscale Investments' lawsuit against
the U.S. Securities and Exchange Commission for nixing the
digital asset manager's proposal to create a spot bitcoin
exchange-traded fund will likely be decided within a year, the
company's chief executive officer said on Thursday.
The regulator ruled late Wednesday that the proposal did not
meet standards designed to prevent fraudulent practices and
protect investors. (https://bit.ly/3yw4Nko)
Grayscale wants to convert its Grayscale Bitcoin Trust
, the world's largest bitcoin fund, into an ETF for
listing on Intercontinental Exchange Inc's NYSE Arca
The SEC rejected over a dozen spot bitcoin ETF applications
in the past year, and approved several bitcoin futures-based
ETFs. The rejections have focused on applicants' lack of
surveillance-sharing agreements with regulated markets relating
to the spot funds' underlying assets.
"The SEC is acting arbitrary and capricious by continuing to
approve bitcoin futures-based ETFs while continuing to deny spot
bitcoin ETFs," Grayscale CEO Michael Sonnenshein said in an
interview with CNBC.
Grayscale sued the SEC almost immediately after its
rejection, and because the defendant is a regulator, the case
goes straight to the appellate court and a decision should made
be within nine to 12 months, Sonnenshein said.
The SEC, which also rejected a spot bitcoin ETF proposal by
Bitwise on Wednesday, declined to comment.
Other would-be issuers of spot bitcoin ETFs rejected by the
SEC in recent months include Fidelity, SkyBridge and Valkyrie.
The price of bitcoin fell below the milestone
$20,000 level on Thursday, to $18,736, just off the volatile
asset's 18-month low of $17,592 on June 18. Bitcoin hit a
record-high price of $69,000 in November.
The SEC's rejection of Grayscale's application did not
reflect "an assessment of whether bitcoin, or blockchain
technology more generally, has utility or value as an innovation
or an investment," the regulator said.
(Reporting by Akriti Sharma in Bengaluru and John McCrank in
New York; Additional reporting by Niket Nishant; Editing by
Leslie Adler, Bradley Perrett and Devika Syamnath and Richard