Judges express skepticism of SEC arguments in Grayscale Bitcoin ETF hearing

03/08 01:29

According to Coindesk, a panel of judges appeared skeptical of the U.S. Securities and Exchange Commission's (SEC) arguments during an appeals court hearing in Grayscale's ongoing bid to convert its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). The company went to court Tuesday to argue the SEC's denial of its ETF application was "arbitrary," telling the panel of judges that Grayscale is "asking to be regulated" by the SEC through its conversion of GBTC to an ETF. Chief Judge Sri Srinivasan and Judges Neomi Rao and Harry Edwards of the District of Columbia Circuit Court of Appeals in Washington, D.C., asked SEC Senior Counsel Emily Parise a number of questions about the agency's argument that bitcoin futures prices underlying futures ETFs were more resistant to manipulation than spot bitcoin markets might be if a spot bitcoin futures ETF was approved. Judge Rao asked a number of questions about futures prices, contrasting with spot prices: "It seems to me that [what] the Commission really needs to explain is how it understands the relationship between bitcoin futures and the spot price of bitcoin ... it seems to me that ... one is just essentially a derivative. They move together 99.9% of the time. So where's the gap, in the Commission's view?" In the SEC's view, said Parise, the 99% correlation does not equate to causation, saying that figure only refers to once-a-day prices rather than intraday prices. She had earlier already mentioned that in the SEC's opinion, "it is undisputed" that spot markets for bitcoin are fragmented, in contrast with bitcoin futures, which trade solely on CME.

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