GBTC Editorial credit: Ascannio /
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When the US Securities and Exchange Commission (SEC) rejected Grayscale’s application to offer a spot Bitcoin exchange-traded fund (ETF), the crypto asset manager was not convinced, instead challenging the regulator in court.

Thus, the ongoing court tussle between the two entities is gathering pace, with Grayscale getting the upper hand as things stand.

Chance To Stop SEC?

According to the crypto influencer Andrew via Twitter, the crypto community discusses Grayscale’s chances of winning the lawsuit against the regulator. If the asset manager wins the court battle, the digital asset market will celebrate its first Spot Bitcoin ETF.

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Meanwhile, the District of Columbia Court of Appeals is expected to hear the oral arguments between the two parties on March 7. Andrew noted that legal experts believe Grayscale has presented a powerful brief that might force the court to push back on regulatory overreach.

Grayscale, however, is confident about its appeal against the financial watchdog, and a win would usher in renewed confidence in the crypto space, signaling a significant victory against the SEC. According to legal experts, should Grayscale lose the lawsuit, it can take the case up to the US Supreme Court to have a better go at winning it.

Grayscale’s chief legal officer, Craig Salm, noted that the firm has what it takes to win against the regulator, given the contents of its brief in the appeal case. Attorney John Deaton, a Ripple supporter, also echoed Salm’s sentiment by stating that Grayscale could win the case against the SEC.

Unsurprisingly, the ongoing court case would prove critical in directing market sentiments toward cryptocurrency amid the SEC’s crackdown on US firms. Meanwhile, the GBTC has been trading at a discount with a negative 46% premium rate.

SEC’s Opposition To GBTC Conversion

In a January 13 filing against the SEC, the digital asset management firm slammed the regulator over its “illogical” and “unreasonable” rejection of its decision not to approve a Spot Bitcoin ETF. Last month, the digital asset management firm sought a court injunction in response to the SEC’s rejection of the company’s application to convert its famous Grayscale Bitcoin Trust (GBTC) to a Spot Bitcoin ETF.

After the SEC declined Grayscale’s application in June 2022, the firm filed a lawsuit against the regulator on the same day, requesting the court review the agency’s order. Since then, the case has been ongoing, with a handful of industry players rallying around Grayscale and the SEC unwilling to bow to pressures from the sector.

The SEC has already approved several requests to establish futures-based Bitcoin ETFs. However, the regulator believes that Spot Bitcoin ETFs are more prone to market manipulation. Grayscale has countered the SEC’s argument by stating that any price manipulation in Spot Bitcoin ETF would also affect the price of Bitcoin futures.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.