Grayscale’s lawsuit against the SEC has started gaining traction as prominent names from the crypto industry rallied behind the asset manager. The latest one to chime in is Coinbase.
The cryptocurrency exchange has filed an amicus brief backing Grayscale Investment’s lawsuit against the United States Securities and Exchange Commission (SEC) for disapproving the company’s proposal for a spot Bitcoin ETF application earlier this year.
“Double Standards”
In its battle against the commission, Grayscale has also garnered support from three digital currency-related groups – Blockchain Association, Chamber of Digital Commerce, Chamber of Progress, and Coin Center. The groups highlighted the presence of strong consumer demand in the country for Bitcoin exposure and argued in Washington federal appeals court that Bitcoin ETFs provide safe, transparent choices for investors.
In their court filing, the groups further contended that the SEC has applied a double standard in universally rejecting proposals to list spot Bitcoin exchange-traded products.
The groups also stated that continuing to deny proposals for listing spot Bitcoin ETPs ignores the exchanges’ existing fraud surveillance apparatus, in addition to the “robust anti-fraud and antimanipulation” features of the spot Bitcoin ETPs, including unique features of the Grayscale Trust.
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“Categorically” denying those proposals is “inconsistent” with the SEC’s treatment of similar products, and such a move contradicts the agency’s regulatory and policy imperatives, the filing said.
“The Commission’s use of a double standard to evaluate Bitcoin futures ETPs and spot ETPs is not only bad policy but also in contravention of the law. The Commission must treat cases alike. Because the Commission has not established material differences between Bitcoin futures ETPs and spot Bitcoin ETPs that warrant disparate treatment, its decision not to approve the Grayscale Trust is arbitrary and capricious and inconsistent with the Commission’s regulatory remit.”
The group said that the SEC’s “thumb on scale” approach does not withstand scrutiny while adding that the commission has allowed similar and riskier products to enter the market and barred spot Bitcoin ETPs even as these products are “ideally suited” for investors who desire exposure to the flagship cryptocurrency.
Widespread Support
Reports suggest that over 11,000 letters were received by the SEC in support of Grayscale’s plan to convert its Grayscale Bitcoin Trust (GBTC) into an ETF.
The asset manager’s Chief Legal Officer, Craig Salm, had earlier asserted that he expected similar support will continue to pour in with the filings of friend-of-the-court briefs for Tuesday’s deadline. In addition to Coinbase and other trade groups, this also includes support from tech firm Susquehanna and crypto bank Silvergate.
Amicus curiae, briefs, or friends of the court, are filed by individuals or organizations who have a strong interest in the case but do not represent a party to an action.
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