In its ongoing lawsuit against the United States Securities and Exchange Commission (SEC), digital asset manager Grayscale has referred to the SEC’s approval of Volatility Shares Trust’s leveraged Bitcoin futures exchange-traded fund (ETF). Grayscale’s legal team highlighted this development as a possible precedent that could support their case for the approval of a spot Bitcoin ETF.
Grayscale filed a letter with the U.S. Court of Appeals for the District of Columbia Circuit, notifying them of the listing of Volatility Shares Trust’s ETF, which began trading on June 27 without any interference from the SEC. The SEC has thus far approved only BTC futures ETFs and has not yet approved any spot crypto ETFs.
According to Grayscale, the Volatility Shares ETF represents an “even riskier investment product” compared to BTC futures ETFs. This assertion implies that if the SEC can allow the former, it should also consider approving Grayscale’s proposed spot Bitcoin ETF. Grayscale had filed a legal challenge against the SEC in June 2022 after the commission rejected its application to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Grayscale argues that the SEC’s differential treatment between spot Bitcoin ETFs and BTC futures ETFs is arbitrary. They believe that allowing spot Bitcoin ETFs like their own to begin trading would be the only way to eliminate this unequal treatment.
Several companies, including BlackRock and ARK Investment Management, have submitted applications for spot crypto ETFs to the SEC. In response to SEC officials claiming insufficiency in clarity and comprehensiveness of these filings, some applications were refiled to include Coinbase, a prominent cryptocurrency exchange, as a surveillance partner.
Grayscale’s reference to the approval of the Volatility Shares ETF in their legal battle underscores the company’s efforts to advocate for a fair and consistent regulatory approach towards cryptocurrency investment products. The outcome of this lawsuit could have significant implications for the future of spot crypto ETFs and the broader regulation of the cryptocurrency industry.