The U.S. Securities and Exchange Commission (SEC) and cryptocurrency investment firm Grayscale Investments are set to battle it out in court in March over the approval of a Bitcoin exchange-traded fund (ETF), a CNBC report said.
Grayscale, a subsidiary of the Digital Currency Group, filed for a Bitcoin ETF in January, but the SEC rejected it in a 3-1 vote. Grayscale then filed a lawsuit against the SEC, claiming that its decision was arbitrary and capricious. The hearing is scheduled to take place on March 7.
The Bitcoin ETF is an investment vehicle that tracks the performance of the digital currency. It would be traded on the stock exchange like a regular ETF. If approved, it would be the first Bitcoin ETF in the U.S.
The SEC’s decision to reject the Bitcoin ETF was based on its concerns over market manipulation. The agency argued that the digital currency is still too volatile and vulnerable to manipulation in its current state. The SEC also said that the proposed ETF did not provide enough investor protection.
Grayscale is arguing that the SEC’s decision was based on outdated information and that the digital currency market has matured and become more regulated since the ETF was first proposed. The firm believes that the SEC’s decision was based on a misinterpretation of the law.
The outcome of the case could have far-reaching implications for the cryptocurrency industry. If the court rules in favor of Grayscale, it could pave the way for other companies to file for ETFs. However, if the SEC wins, it could set a precedent that could prevent other firms from filing for ETFs in the future.