Grayscale Investments filed late Tuesday its opening legal challenge to the Securities and Exchange Commission's rejection of the firm's bid to convert its $12 billion Grayscale Bitcoin Trust to a spot bitcoin ETF.
The SEC denied Grayscale's application on June 29. Grayscale announced the same day that it was suing the securities regulator over its decision.
"Although bitcoin may be a relatively new asset, the legal issue here is straightforward," states the brief, filed in the U.S. Court of Appeals for the District of Columbia Circuit.
The commission, the brief states, has violated the Administrative Procedure Act's "most basic requirements by failing to justify its vastly different treatment of bitcoin futures ETPs and spot bitcoin ETPs."
Indeed, the commission's decision "is not merely discriminatory and unreasoned: it harms the 850,000 investors who own shares in the Trust," Grayscale states.
"Given that the Commission did not approve the Trust to trade as an ETP on the Exchange, the value of its shares cannot closely track the value of the Trust's underlying bitcoin assets — depriving Trust shareholders of billions of dollars in value. There is simply no justification for continuing to inflict such serious investor harms," it explained.
