Grayscale Investments CEO Michael Sonnenshein has called on the US Securities and Exchange Commission (SEC) to protect Grayscale investors by returning the true value of assets. In a recent interview on the popular “What Bitcoin Did” podcast hosted by Peter McCormack, Sonnenshein stated that he “cannot imagine” why the SEC “would not want” to protect grayscale investors by approving Grayscale Bitcoin Trust (GBTC). . as a spot Bitcoin exchange-traded fund (ETF).

Sonnenshein explained that the SEC acted arbitrarily in denying GBTC approval to be a spot Bitcoin ETF while approving Bitcoin Futures ETFs. He added that the SEC violated the administrative procedures law, which ensures that the regulator does not show “favouritism” or act “arbitrarily.” According to Sonnenshein, Grayscale is currently suing the SEC over the denial of its initial application, and a decision on the case could be reached by fall 2023.

If GBTC were to be approved as a spot Bitcoin ETF, there is a “couple of billions of dollars” of capital that would immediately return to investors’ pockets, “overnight”, as the fund is ” would bleed” down to his net worth. value (VNA). Sonnenshein explained that this is because GBTC currently trades at a discount to its NAV, but if it were to convert to an ETF, there would be an “arbitrage mechanism” built in and there would no longer be a discount or premium.

Grayscale has more than a million investor accounts, with investors from around the world counting on the company to “do what’s right for them.” Sonnenshein “cannot imagine” why the SEC would not want to “protect investors” and “give them back that value.” He added that Grayscale will not “shrink” from the fact that it has a “commercial interest” in this approval.

This comes after the SEC filed a 73-page brief with the US Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its Bitcoin. Trust $12 billion in a point-based Bitcoin ETF in June 2022. The SEC based its decision on findings that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. The agency had made similar findings in several previous applications to create spot-based Bitcoin ETFs.

Grayscale is a digital currency investment firm that offers a range of investment products, including the Grayscale Bitcoin Trust, which is designed to give investors exposure to the price of Bitcoin without the challenges of buying, storing, and protecting Bitcoin directly. The trust is listed on the OTCQX market and is available to accredited and non-accredited investors. GBTC launched in 2013 and as of January 2022 had over $30 billion in assets under management. Grayscale’s Bitcoin Trust is one of the most popular ways for investors to gain exposure to Bitcoin, and the company has been at the forefront of the movement to bring Bitcoin into the mainstream.

The SEC has been hesitant to approve Bitcoin ETFs, citing concerns about fraud, manipulation, and a lack of regulation in the cryptocurrency market. In the past, the SEC has rejected several Bitcoin ETF proposals, citing concerns about market manipulation and insufficient investor protection. However, the agency has recently shown a more favorable attitude towards Bitcoin, with several Bitcoin Futures ETFs receiving approval.

In the case of Grayscale’s GBTC, the SEC has raised concerns about the structure of the trust and the potential for market manipulation. Grayscale’s proposal to convert GBTC into a spot-based Bitcoin ETF was rejected in June 2022, with the SEC citing concerns about a lack of regulation in the Bitcoin market and the potential for market manipulation.

Grayscale has challenged the SEC’s decision, arguing that the agency acted arbitrarily and violated the administrative procedures law. Grayscale CEO Michael Sonnenshein has been vocal in his criticism of the SEC’s decision, arguing that he has hurt investors by preventing them from realizing the true value of their GBTC investment.

The case is currently making its way in the US Court of Appeals for the District of Columbia, with a decision expected in the fall of 2023. If Grayscale is successful in his challenge, it could pave the way for him to be other Bitcoin ETFs are approved, opening a new avenue for investors to gain exposure to Bitcoin.

Overall, the Grayscale-SEC dispute highlights the challenges regulators face when trying to balance investor protection with the need to encourage innovation in the cryptocurrency market. As the digital asset market continues to grow, we are likely to see more clashes between regulators and industry participants as they try to navigate this rapidly changing landscape.