Lawyers for Grayscale, a crypto asset manager, criticized regulators on Monday for approving a leveraged bitcoin-based exchange traded fund (ETF) amid the company's lawsuit over the U.S. Securities and Exchange Commission’s (SEC) rejection of its own spot bitcoin ETF application, according to a letter the company tweeted.
The letter, addressed to the U.S. Court of Appeals for the District of Columbia Circuit, alleges the SEC approved a leveraged ETF in late June that is "even riskier" than its "traditional" bitcoin-based futures exchange-traded products. Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent company.
"While the commission could theoretically correct its discriminatory treatment of spot bitcoin ETPs by rescinding its approval of all bitcoin-based ETPs, the Commission…the Commission's apparent willingness to permit even a leveraged bitcoin futures ETP—a particularly high-risk version of a bitcoin futures product—makes clear [it] has no intention of doing so," Grayscale's lawyers said in the letter.
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The SEC rejected Grayscale's application to convert its Grayscale Bitcoin Trust (GBTC) into an ETF last year, prompting the company to file a lawsuit against the regulatory agency alleging a violation of the Administrative Procedures Act. The DC Circuit Court heard arguments from both parties in March, and a ruling may come by the end of the year.