• Grayscale, a digital asset management company, has criticized the SEC for their “illogical” and “fundamentally unreasonable” decision to reject a spot bitcoin ETF.
• Grayscale argues that the SEC’s rationale for the rejection is flawed and not based on market data.
• Grayscale’s Bitcoin Trust is up 17.5% for the year and has more than $10 billion in assets under management.

Digital asset management company Grayscale Investments has made a strong case against the U.S. Securities and Exchange Commission’s (SEC) recent decision to reject a spot bitcoin exchange-traded fund (ETF). In a new court filing, Grayscale argued that the SEC’s rationale for the rejection was “illogical” and “fundamentally unreasonable”.

Grayscale is the largest digital asset management firm in the world and manages assets of over $10 billion. The firm’s Bitcoin Trust, which holds the world’s largest collection of bitcoin, is up 17.5% for the year, significantly outpacing the 5% rise in the price of bitcoin. Grayscale CEO Barry Silbert has long been an advocate of a spot bitcoin ETF, believing that such a fund would open up the asset class to more investors. However, the SEC has rejected applications for such funds multiple times, citing concerns about the potential for market manipulation and investor protection.

In a strongly worded court filing, Grayscale slammed the SEC for its “illogical and fundamentally unreasonable argument” against approving a spot bitcoin ETF. The firm argued that the SEC’s rationale for the rejection was flawed and not supported by market data. Grayscale also noted that the SEC’s decision was inconsistent with its approval of several other ETFs, which have similar market structure and exposure to similar risks.

Grayscale’s filing concluded by noting that the SEC’s argument was “unsupported by the record and contrary to the applicable law” and that the SEC had failed to provide a reasonable explanation for its decision. The firm urged the court to overturn the SEC’s decision and approve the spot bitcoin ETF.

The SEC’s decision to reject the spot bitcoin ETF has been met with widespread criticism from the crypto industry. Critics argue that the SEC has failed to recognize the potential of the asset class and is stifling innovation by preventing the approval of such funds. It remains to be seen how the court will rule on Grayscale’s case, but the firm’s legal challenge has certainly sparked an important debate about the role of the SEC in the crypto industry.