Attorneys for Grayscale, the digital currency asset manager, have sent a letter to the US Securities and Exchange Commission arguing that the regulator’s approval of bitcoin futures exchange-traded funds, but not bitcoin spot-based ETFs, is “arbitrary and capricious,” and in violation of the Administrative Procedure Act (APA).

This is a new argument in the context of $BTC ETFs that wasn’t possible until the approval of the first #Bitcoin futures-based #ETF and subsequent rejection of yet another spot-based ETF. So, what is this new argument?:

— Craig Salm (@CraigSalm) November 30, 2021

#Bitcoin ETF products — Bitcoin futures-based ETFs registered under the ‘40 Act and Bitcoin spot-based ETFs registered under the ‘33 Act — are an example of two *like* situations that should be treated *alike*… but are no longer.

— Craig Salm (@CraigSalm) November 30, 2021

We unpacked this letter and the new argument in favor of a spot Bitcoin ETF in a @Grayscale Source post here: https://t.co/TjVQFDBkrj

— Craig Salm (@CraigSalm) November 30, 2021

Thank you to Joe Hall, Annette Nazareth, Jai Massari, Greg Rowland, Zach Zweihorn, Paul Mishkin, Daniel Schwartz and the rest of the Davis Polk team; @RepTomEmmer & @RepDarrenSoto; and everyone else who has been supporting @grayscale in its mission to convert $GBTC into an #ETF.

— Craig Salm (@CraigSalm) November 30, 2021

Great points. Of course we agree. Do you think letter enough tho as Genz seems so rigid in his view. Why not an actual lawsuit? or is the letter first step in that direction? Curious what @jchervinsky thinks

— Eric Balchunas (@EricBalchunas) November 30, 2021

There would only be standing for a lawsuit if the SEC decides to reject the application. They could still approve it, at least in theory!

But in the event of rejection, the letter is a (very compelling) outline of a complaint that could be filed after the fact.

— Jake Chervinsky (@jchervinsky) November 30, 2021

Now that bitcoin futures ETFs are live, the SEC has no valid justification for denying @Grayscale's spot ETF application. The Administrative Procedures Act demands approval. It's time.

Last night, @blockchainassn filed a letter in support of the spot ETF. Read our views here: https://t.co/pEYbZK5wqz

— Jake Chervinsky (@jchervinsky) November 30, 2021