The Blockchain Association has provided a brief to the courts outlining the primary arguments in favor of a spot Bitcoin exchange-traded product (ETP) from Grayscale.
Last week, crypto asset fund manager Grayscale filed its opening legal brief in a U.S. Court of Appeals. The appeal challenges the decision by the Securities and Exchange Commission (SEC) to deny the conversion of its Bitcoin Trust fund (GBTC) into a spot Bitcoin ETF.
This week, the company received backing from the Blockchain Association, which filed its own amicus brief on Oct. 18.
“By denying access to spot bitcoin ETPs, the SEC engages in an arbitrary and capricious practice of picking winners and losers among investment products,” said Association policy council Marisa Tashman Coppel.
SEC Bitcoin double standards
The Blockchain Association is an organization dedicated to improving public policy for crypto networks. Members include industry leaders, lawyers, research firms, security firms, and venture capital companies.
The Association’s head of policy, Jake Chervinsky, backed the move. He hopes that it will help the court see the “unfair and unlawful double standard that the SEC has applied to bitcoin for all these years.”
The brief claims that the SEC has contravened its own mandate to ensure “investors are free to choose products best suited to their goals and have the information necessary to make well-informed decisions.”
Furthermore, the financial regulator has not established material differences between a Bitcoin futures-based ETP and a spot fund.
Coppel cited a physically-backed palladium fund with the same market size and risks as Bitcoin that the SEC has approved. The regulator’s inconsistent approach to investment products appears to be part of its extra-judicial targeting of the crypto industry. This sentiment was also pointed out by Republican Senator Tom Emmer earlier this year. Coppel concluded that the SEC is not playing by its own rules:
“It is clear that the SEC has no basis for treating spot bitcoin products differently from bitcoin futures products. In so doing, the SEC has abandoned its investor protection mandate.”
Grayscale Bitcoin fund discount deepens
The fund in question is the largest institutional Bitcoin fund on the market, with assets under management of $12.4 billion. However, it is currently trading at a record-low discount to the net asset value of -35.8%, according to Ycharts.
So far this year, the fund has depreciated by 67% as the bear market drives BTC prices lower.
Bitcoin prices, meanwhile, have declined by 1.9% on the day to trade at $19,215 as the consolidation continues.
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