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Grayscale sues the SEC, initiating a major Bitcoin ETF legal battle

The US-based Grayscale Investments, one of the largest Bitcoin (BTC) and cryptocurrency investment firms, filed a lawsuit against the US Securities and Exchange Commission (SEC) after the latter denied its request to turn the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund in the world, into a spot exchange-trading fund (ETF).

In order to protect the interests of GBTC and its investors, the company stated that taking the matter to court was necessary due to the SEC’s discriminatory treatment of issuers and arbitrary and capricious measures.

They contend that the market watchdog is failing to treat BTC investment vehicles consistently as seen by its approval of multiple BTC futures ETFs while rejecting GBTC’s application to convert to a spot ETF.

“Regulators should logically be comfortable with ETFs that hold the same asset if they are at ease with ETFs that hold derivatives of that asset,” they continued.

The SEC continues to assert that the conversion of GBTC would not stop fraudulent and manipulative conduct and practices, protect investors, or the general welfare.

Currently, the GBTC has bitcoins valued at $12.9 billion. According to Grayscale, as of June 29, GBTC shares were trading at a price that was almost 30% below their net asset value, or about USD 8 billion in unrealized shareholder value.

The company stated that it “holds firm in our opinion that changing GBTC to a spot Bitcoin ETF remains the best option for investors” since doing so would “essentially erase the discount and cause the shares to track the price of bitcoin.”

BTC is trading at USD 20,078 at 03:49 UTC, down 1% from the previous day and essentially constant from the previous week.

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