The SEC rejects Grayscale's application to become an ETF [Dummy edition]

I've been reading plenty of posts written here on Leo, and one thing I noticed is that there aren't many authors who target the low level audience, the readers who might not be finance experts or crypto gurus but yet roam here on Leo looking to acquire some knowledge and experience, trying to riddle out the finance world.

I am a seasoned investor, I've made my fair share of profit and I am quite happy with my position, but it was never like this. I started from the bottom and I had to learn the hard way, losing more money than I could afford more than a few times. Eventually, I learned my lessons, did my own research, spent a lot of time reading and looking for the next best thing and I made it, eventually. Not made it made it, but I'm in a position where I can now focus on what I like.

Which is why I have decided to explain one topic related to the current state of affairs regarding the cryptocurrency world and the finance scenario. Hopefully and if I have the time to do so, I will share one of these posts every day.

The SEC rejects Grayscale's application to become an ETF [Dummy edition]

The Grayscale Bitcoin trust (GBTC) is an investment service that offers financial products that are backed by crypto assets. In short words, the invest your money on crypto and promise big returns while their investors just sit on the beach and don't have to deal with learning about web3, cryptocurrency or blockchain, and just want to make some profit while surrendering a piece of their gains.

It works like any other hedge fund or investment firm, they just focus on crypto assets. GBTC has a lot of options for their investors depending on how much risk they are willing to take with the expectation of bigger profits. It's just like that neighbor you have that invited every person that lives down the street into BTC and offered to buy their crypto for them and manage it for a small fee, but at a much bigger larger scale (although it probably GBTC began in a similar situation 10 years ago, I'm not quire versed on their story).

In October 2021, Grayscale (the parent company) applied to convert its Grayscale Bitcoin Trust (GBTC), the world's largest bitcoin fund, into an ETF for listing on Intercontinental Exchange Inc's NYSE Arca exchange, which is basically where the really big boys play at, where more money will eventually flow into their ark and they'll have more funds to play with. The idea of a spot bitcoin ETF for GBTC would offer a low-cost and easily accessible way for individuals and institutions to invest in bitcoin.

After several delays and many requests from the SEC for additional information, the SEC just gave their verdict (denied), which was rapidly sent to appeal by Grayscale, and since the SEC is a regulator, the case goes straight to the appellate court and a decision should made be within nine to 12 months.

The reason for this rejection stated that Grayscale's application did not reflect "an assessment of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment," which is just a translation for "we don't understand it and we think it's bullcrap, so we are denying the application, also citing some concepts like market manipulation, the role of Tether in the broader bitcoin ecosystem and the lack of a surveillance-sharing agreement between a "regulated market of significant size" and a regulated exchange, which is basically what the SEC has said since any other attempt over spot Bitcoin ETF applications.

The ironic part of this whole ordeal is that the SEC already approved an ETF based on bitcoin futures but is constantly denying every submission based on the underlying investment (Bitcoin). This is like saying that underwear football is allowed at the Olympics but the actual football is not, get it?

This is not a low punch for Grayscale, but also for every other crypto investor that was involved actively or just holds crypto, because many BTC doxxed investors went through a long campaign in hopes of proving to the SEC the product contained sufficient investor protections.

We have a long year to go, but I am anticipating a positive outcome for this appeal, which is called "Grayscale Investments vs. Securities and Exchange Commission"

Posted Using LeoFinance ^Beta