Cryptoast Interview: Grayscale’s ETF Battle with the SEC

In a recent interview conducted by Cryptoast, Cyril Sabbagh, the Managing Director at Melanion Capital, discussed with Lilian Aliaga, a significant legal battle involving the U.S. Securities and Exchange Commission (SEC) and Grayscale, a major American asset management company. The case revolves around Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) into an Exchange-Traded Fund (ETF) based on the Bitcoin spot market.

The interview highlighted that the SEC had initially rejected Grayscale’s request, citing concerns about market manipulation risks. Grayscale argued that these risks exist in both the spot and futures markets and that their trust product was designed with ETF-like characteristics. Despite this, the SEC approved Bitcoin futures-based ETFs while denying the Bitcoin spot-based ETF conversion.

In a recent court ruling, the U.S. Appeals Court sided with Grayscale, asserting that the SEC’s rejection lacked proper justification. The SEC now faces the choice of accepting the court’s decision and approving Grayscale’s ETF conversion or appealing the ruling and providing an alternative argument for denial. This victory for Grayscale could potentially impact the industry by democratizing access to Bitcoin, boosting adoption, and directing substantial new investment flows into the cryptocurrency market.

The interview also speculated about the broader implications of this decision on other pending Bitcoin spot-based ETF applications, noting that the court’s ruling could weaken the SEC’s grounds for further rejections. The potential approval of Bitcoin spot-based ETFs could lead to increased adoption, simplifying entry for retail investors and potentially igniting a bullish trend in the cryptocurrency market.

The interview featured insights on the legal and market dynamics surrounding the Grayscale case and its potential impact on the crypto industry. The conversation highlighted the significance of the court’s decision and its potential ramifications for the broader adoption of Bitcoin and cryptocurrencies.


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.

The information relayed in this article must be considered and analyzed in light of all the risks identified in the fund’s pre-contractual documentation, which you can find via the following link.

Stay informed

Sign up to our newsletter and receive regular updates about Bitcoin and how you can invest in it. 

Need more guidance and support? We’re here to help.
Book a one-on-one call with our experts

Continue reading