Grayscale Investments, the world’s largest crypto asset manager, has emerged triumphant in its legal battle against the SEC. The court of appeals ruled that the SEC’s decision to reject the GBTC application was “arbitrary and capricious.”

SEC’s Decision Reversed

The SEC previously rejected Grayscale’s application, citing concerns that the product did not adequately protect against fraudulent and manipulative practices. However, Grayscale fought back with a lawsuit, and the court’s latest decision overturned the SEC’s initial ruling.

According to court filings on August 29, Circuit Judge Neomi Rao granted Grayscale’s petition for review, instructing the SEC to vacate its order denying the GBTC listing application. This favorable outcome indicates that the SEC failed to provide sufficient explanation for rejecting Grayscale’s proposal. However, it does not guarantee the immediate listing of a Grayscale spot Bitcoin ETF.

Grayscale is currently conducting a thorough review of the court’s opinion, as stated by CEO Michael Sonnenshein.

JUST IN

The D.C. Circuit ruled in favor of @Grayscale in our lawsuit challenging the SEC's decision to deny $GBTC's conversion to an ETF!

Thank you to everyone who has been on this journey with us, especially our investors. We are grateful for your support and…

— Sonnenshein (@Sonnenshein) August 29, 2023

Persistent Legal Battle

The legal dispute began on June 29, 2022, when the SEC denied Grayscale’s request to convert GBTC into a spot ETF. In response, Grayscale’s senior legal strategist, former U.S. Solicitor General Donald B. Verrilli Jr., filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit. At the time, Sonnenshein expressed deep disappointment and vehement disagreement with the SEC’s decision.

Grayscale Bitcoin Trust is the largest over-the-counter Bitcoin fund, managing over $14 billion in assets. The ongoing litigation with the SEC and credit concerns surrounding its parent company, Digital Currency Group (DCG), caused GBTC shares to trade at a discount of nearly 50% to their net asset value earlier this year.

Challenges and Road to Recovery

Grayscale has faced various challenges throughout its journey. In October 2022, it terminated significant agreements with partner and digital currency broker Genesis Global. Shortly after, Genesis Global temporarily paused withdrawals due to market turmoil triggered by the collapse of the cryptocurrency exchange FTX. Additionally, the firm suffered the repercussions of the Three Arrows Capital debacle, with Genesis still owed a significant debt of $1.2 billion.

Furthermore, DCG, Grayscale’s parent company, came under scrutiny as it owes creditors over $3 billion and is reportedly contemplating selling a $500 million venture capital portfolio. Genesis Global alone owes $900 million to users participating in cryptocurrency exchange Gemini’s Earn program.

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The post Grayscale Wins Landmark SEC Lawsuit, Paving the Way for Bitcoin ETF Review appeared first on Times Tabloid.

Michael Sonnenshein Reacts to BITI Launch

Over the years, the Securities and Exchange Commission (SEC) which plays regulatory roles has not been very comfortable with cryptocurrency and crypto-linked investment products. 

Countless times, the body of regulators has reiterated that financial technology (crypto) lacks maturity and sufficient regulations. Hence, the entity often claims that the crypto market is vulnerable to being manipulated and enabling scam incidents.

On these grounds, the SEC has rejected several Ethereum and Bitcoin crypto exchange-traded funds (ETFs) proposals. However, the recent approval of ProShares Short Bitcoin Strategy ETF (BITI) by the SEC could mean that the body is getting friendly with Bitcoin and cryptos in general.

This act has also received mixed comments from several crypto proponents like the GrayScale CEO. In a Twitter thread, Michael Sonnenshein shared his views. The CEO appears to be uncomfortable with the inverse Bitcoin exposure BITI ETF presents to the market, noting that Grayscale does not currently have plans to offer products that short crypto.

“I am not providing investment advice on $BITI or any other ETF, I’m not “calling the bottom,” and Grayscale does not currently have plans to offer products that short crypto.”

 

“Bitcoin’s price discovery is supported by not only a healthy two-sided market that underpins multiple long products but also a derivatives market robust enough to offer short exposure to retail investors,” he added.

Read More: ProShares Plans to Release the First Short Bitcoin-Linked ETF in the U.S. on June 21

Grayscale CEO Longs for Spots Bitcoin ETFs

Additionally, he pointed out that the SEC’s approval of BITI exchange-traded fund extensively entails that Bitcoin (BTC) is gradually being seen as a matured asset by regulators. Furthermore, he subtly urges the regulatory body to consider the approval of spots Bitcoin ETFs rather than continuous denial, claiming that it would be a “logical next step” to take.

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The post GrayScale CEO: Approval of an ETF that Provides Inverse Exposure to Bitcoin Futures Shows Positivity for Crypto appeared first on Times Tabloid.

ProShares Short Bitcoin Strategy ETF

Over the years, it has been seen that Bitcoin (BTC) can drop in value. Overall, price declines in the cryptocurrency market will never cease to occur. For this reason, the ProShares Short Bitcoin Strategy ETF with the ticker BITI is being initiated. 

This exchange-traded fund is designed to enable investors to potentially profit from Bitcoin even in a downtrend market. Also, the ProShares BITI seeks to present an avenue for investors to hedge their cryptocurrency holdings/ exposure.

More so, it is structured to deliver the inverse of the performance of the S&P CME Bitcoin Futures Index. Meanwhile, it is through bitcoin futures contracts that the ProShares Short Bitcoin-ETF intends to attain exposure.

Per the announcement, the ProShares BITI “will offer investors the opportunity to potentially profit when the daily price of bitcoin declines, with the convenience, cost-efficiency, and liquidity of an ETF.”

In the words of ProShares CEO, Michael L. Sapir;

BITI affords investors who believe that the price of bitcoin will drop an opportunity to potentially profit or hedge their cryptocurrency holdings. BITI enables investors to conveniently obtain short exposure to bitcoin through buying an ETF in a traditional brokerage account.

Investors should monitor their holdings as frequently as daily. Investors should consult the prospectus for further details on the calculation of the returns and the risks associated with investing in this product, he added.

Interestingly, ProShares’ affiliated mutual fund company, ProFunds, will roll out the Short Bitcoin Strategy ProFund with the ticker BITIX on the same day. It should be noted that the BITIX mutual fund will possess the same investment aim as BITI and it is for investors who prefer a mutual fund over an exchange-traded fund (ETF).

On the other hand, ProShares company warns investors of the risk associated with bitcoin and bitcoin futures in terms of lack of regulation, vulnerability to market manipulation, and price volatility. The company reiterates that there is no guarantee of the products achieving their investment objectives.

See Also: VeChain Set To Implement Finality-With-One-Bit (FOB), a Block Finality Solution

ProShares’ ETFs on the Rise

ProShares continues to increase its lineup of ETFs with the introduction of BITI and BITIX. Reportedly, BITO, which was the company’s first bitcoin-linked ETF in the United States became the most successful ETF ever launched in history. 

BITO was launched in October 2021 and it attracted over a billion dollars in assets in just two days only. In the same vein, ProFunds launched the first bitcoin-linked mutual fund, BTCFX, in July 2021.

The company prides itself as the only one in the United States to allow investors to express their views on the direction of bitcoin regardless of price movement.

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The post ProShares Plans to Release the First Short Bitcoin-Linked ETF in the U.S. on June 21 appeared first on Times Tabloid.