Grayscale CEO hopes the GBTC fund doesn’t get caught in the crossfire in the battle between the SEC and CFTC.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have so far found themselves grappling to secure jurisdiction over the broader cryptocurrency markets in the United States.
The SEC which appears more active in the scene has engaged in several regulations by-enforcement practices against some crypto entities. The battle for supremacy between watchdogs stems from the U.S. Congress’s inability to classify certain digital assets as securities or commodities.
Amidst this struggle, Grayscale’s CEO Michael Sonnenshein is hoping the company’s Grayscale Bitcoin Trust (GBTC) Fund doesn’t suffer from the two watchdogs’ tussle, as he speaks on Grayscale’s lawsuit against the SEC for declining its application to convert the GBTC fund to a spot Bitcoin spot ETF.
Speaking in a CNBC Squawk Box interview Wednesday. Sonnenshein discussed the litigation against the SEC, as Grayscale recently announced filing its opening brief in the lawsuit. Sonnenshein stressed the assertion that the SEC’s rejection of a GBTC spot ETF is a discriminatory decision.
Despite rejecting several spot Bitcoin ETF applications, the SEC appears to have been more lenient towards futures BTC ETFs, as several applications for the latter have been approved by the regulator.
Sonnenshein argued that spot BTC ETFs should receive similar treatments from the SEC, considering that both spot and futures BTC ETFs get their prices from the underlying BTC market.
When asked if he thinks the SEC’s rejections are influenced by its tussle with the CFTC on differentiating securities from commodities when it concerns cryptocurrencies, Sonnenshein noted that he hopes GBTC doesn’t get burnt in the regulators’ battle for supremacy.
“I hope that GBTC doesn’t get caught in the crosshairs between who has jurisdictional authority over crypto,” Sonnenshein remarked. He further highlighted that multiple bills have sought to address the regularity uncertainty, noting that the industry is pushing for clarity.
"I hope that $GBTC doesn't get caught in the crosshairs between who has jurisdictional authority over #crypto," says @Grayscale CEO @Sonnenshein on its lawsuit against the SEC. "You are seeing our entire industry asking our regulators to develop these frameworks." pic.twitter.com/60E3GGjqi2
— Squawk Box (@SquawkCNBC) October 12, 2022
Recall that SEC Chair Gary Gensler previously said he doesn’t mind a decision from Congress to put jurisdiction over certain cryptocurrencies, such as BTC and ETH, under the CFTC. Gensler, however, noted that his support for the decision comes if the SEC is allowed to regulate assets it believes are securities.
Following Ethereum’s switch to PoS, Gensler later argued that PoS assets operate with a pattern native to securities, insinuating that most of these assets could be considered securities. Despite not explicitly mentioning Ethereum, the crypto community raised alarms about the SEC looking to classify ETH as security. Additionally, as previously reported, Gensler noted on October 3 that he believes the law on crypto is clear enough, asserting that most tokens are securities. These comments followed the SEC’s charge against Kim Kardashian for shilling EthereumMax.
Most crypto proponents are not particularly pleased with the SEC’s decisions regarding cryptocurrencies. Its rejection of the GBTC spot BTC ETF is one such decision. Meanwhile, Grayscale has persisted in expressing displeasure over the watchdog’s move.
Grayscale revealed that it had filed its opening brief in the lawsuit challenging the SEC’s decision. Recall that the SEC rejected Grayscale’s application to convert its GBTC fund to a spot BTC ETF on June 29 following a series of deferments. Grayscale initiated litigation against the agency on the same day, challenging its decision.
We’ve filed the opening brief in our lawsuit against the SEC, challenging their decision to deny our application to convert $GBTC to a spot Bitcoin ETF.
A “brief” thread:
— Grayscale (@Grayscale) October 12, 2022
Per information from the appellate phase timeline shared by Grayscale, the firm’s Amicus Brief due date is October 18. After which, the SEC is expected to file its brief on November 9. This legal battle will mark the SEC’s second ongoing major litigation against a top entity within the crypto space as its tussle with Ripple Labs continues.
Grayscale argues that its proposal to convert GBTC to a spot BTC ETF satisfies all financial requirements. The firm asserts that the SEC is only willfully and unjustifiably treating spot BTC ETFs with a “special harshness.”