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Digital asset managers are trying to provide more legal investing opportunities by fighting against regulators.
Grayscale Investments had applied to convert its trust into an exchange-traded fund. One of the largest digital asset managers filed a lawsuit against the SEC.
Bitwise Asset Management was denied an application for an exchange traded fund.
Over the past year, the SEC has denied over a dozen spot and future-based bitcoin exchange traded funds.
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Spot and futures-based exchange traded funds trade based on the price of bitcoin itself, while futures-based exchange traded funds are tied to an index. The SEC notes that the futures market is regulated by the Commodities Futures Trading Commission.
The SEC allows traders to bet on the value of the virtual currency through a futures contract.
Craig Salm, chief legal officer at Grayscale, said that the SEC once denied both futures and spotbitcoin exchange traded funds.
That was last year.
According to Michael Sonnenshein, CEO at Grayscale Investments, the SEC has continued to approve both long and short exposure futures exchange traded funds for the last few months. One of the most important arguments is the disparate treatment.
The case will go to an appellate court and a decision will be made within a year.
The lack of a surveillance-sharing agreement between a regulated market and a regulated exchange is one of the reasons why the SEC rejected it. Concerns have been expressed by the regulators for years in regards to rejecting other applications for the bitcoin exchange traded fund.
Ryan Selkis, founder and CEO of Messari, wrote in a report that GBTC is the largest and most liquid publicly traded exchange traded product in the world. Selkis wrote thatGrayscale products are not actually Exchange Traded Funds.
The SEC won't approve a spotbitcoin exchange traded fund until they have regulatory oversight, according to the president of The Exchange Store. Even though there is a Grayscale lawsuit that appears to have at least some validity, the SEC didn't flinch in denying these spotbitcoin exchange traded funds
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