In its lawsuit, Grayscale pointed to the SEC’s approval of several bitcoin futures ETFs to argue that greenlighting one type (futures ETFs) of instrument while rejecting the other (spot, or bitcoin-holding ETFs) was arbitrary, and thus a violation of the Administrative Procedure Act (APA).
The SEC pushed back in its filing, arguing that “the two products are not the same” and have “fundamental differences in the ability to detect and deter fraud and manipulation,” that “reasonably support treating the two products differently.”
Futures ETFs, unlike spot ETFs, are tradable only on the Chicago Mercantile Exchange, which the SEC pointed out is overseen by federal regulators and performs “extensive surveillance of the trading activity on its market.”
The SEC also pointed to prior statements made by the Commodity Futures Trading Commission (CFTC) that its permission to trade bitcoin futures “does NOT provide for … value judgements about the underlying spot market.”
Source: SEC Strikes Back in Grayscale Suit Over GBTC ETF Conversion