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 article and the strategy it outlines, are provided for informational purposes only. The content within is not intended to be financial advice and should not be taken as such. The historical performance of Bitcoin ETFs is no guarantee of future results.

Investing in Bitcoin ETFs involves a high degree of risk, including the loss of all your investment, and may not be suitable for all investors. Market conditions can vary significantly, and the volatility of cryptocurrency markets can lead to rapid and substantial losses.

Readers are advised to conduct their own due diligence and consult with a professional financial advisor before making any investment decisions. The views and opinions expressed herein are those of the author and do not necessarily reflect the official policy or position of any financial institution or investment service.

Past performance is not indicative of future results. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation.

The author and publisher of this strategy are not responsible for any financial losses or gains you may experience. Investing in the markets is speculative; it should only be done with risk capital that if lost will not significantly affect your lifestyle.

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