Judges Question SEC’s Logic on Grayscale’s Bitcoin Spot ETF Appeal

• Judges from the District of Columbia Circuit Court of Appeals questioned the SEC’s logic in not approving Grayscale Investments’ spot Bitcoin ETF.
• Grayscale’s lead counsel argued that the SEC has approved futures-based ETPs and there is no difference between them and a spot Bitcoin ETF.
• The SEC lawyer argued that Grayscale needs to provide evidence to show that the spot market prices do not lead the futures market prices.

Judges Question SEC Logic

Federal appellate court judges have questioned the logic behind the US Securities and Exchange Commission (SEC) not approving Grayscale Investments’ spot Bitcoin exchange-traded fund (ETF). During a hearing on March 7, Chief Judge Sri Srinivasan, along with Judges Neomi Rao and Harry Edwards of the District of Columbia Circuit Court of Appeals heard arguments from both sides.

Grayscale Argues for Spot ETF Approval

Grayscale’s lead counsel Don Verrilli told judges that the SEC’s rejection of their application for a spot Bitcoin ETF was „arbitrary“ as it had already approved futures-based ETPs and argued that there was no difference between them. He also asked for a path forward towards regulation.

SEC Argues Evidence Is Mixed

The SEC lawyer Emily Parise said that Grayscal’es argument was an „unsupported empirical leap“ as there wasn’t enough data to prove causation between spot and futures markets. She added that Grayscale needed to provide evidence showing how these two markets function together in order to alleviate any concerns held by the regulator.

Judge Points Out Flaws In SEC Logic

Judge Neomi Rao pointed out during the hearing that while Grayscale has provided ample information regarding its arguments, it seems like “the [SEC] has to explain why they [Grayscale] are wrong in the evidence they have proffered” regarding approval for a spot Bitcoin ETF. Parise then responded saying that while there is mixed evidence, she believes Grayscale can still satisfy their concerns if they provide more studies proving causation between these two markets.


It remains unclear how this case will play out but what is certain is that both sides will continue making their respective arguments until a verdict is reached by either party or through further appeals down the line.

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