Another Grayscale SEC Lawsuit Speculation Brewing, Here’s Reason

Known as historical legal opponents, the court drag between Grayscale Investments and the United States Securities and Exchange Commission (SEC) does not appear to be ending anytime soon.

SEC Stalling on Bitcoin ETF Options Trading Decision

From current speculations by legal experts in the industry, there are strong possibilities that Grayscale may choose to pursue legal actions against the U.S. securities regulator over the eventual rejection of its Options trading request for its Grayscale Bitcoin Trust (GBTC). 

The President of ETF Store Nate Geraci made this speculation on X about the letter that Grayscale sent to the SEC on this subject. 

Shortly after the SEC approved eleven spot Bitcoin ETFs from top asset management firms including Grayscale and BlackRock, Grayscale CEO Michael Sonnenshein began to advocate for listed spot Bitcoin ETF Options. For the request to gain traction, he called on industry members to support the push for ETF Options trading. 

To bolster his advocacy, he mentioned the fact that Grayscale has been in the public market for quite some time now but it never made it to the listed Options level. Consequently, the Michael Sonnenshein-led firm moved to submit a Bitcoin ETF options trading filing with the SEC. Meanwhile, BlackRock had submitted a similar application with the agency earlier.

The SEC delayed its decision to BlackRock while it opened up the invitation to members of the public for their feedback on the proposed offering. The same approach was employed towards Grayscale’s application and so far no decision has been made by the SEC. 

However, it is suspected that the regulator may delay its decision for a very long period as it did with spot Bitcoin ETFs. James Seyffart, Senior ETF Analyst at Bloomberg, speculates that the decision from the SEC may not come until later this year with September being the feasible timeline.

Should Grayscale be Concerned About SEC’s Delay?

From the tone of its letter to the SEC, Grayscale appears jittery that the SEC may reject its application as it did with the GBTC conversion push in 2022. If this eventually happens, the asset manager believes that the rejection would “unfairly discriminate” against its shareholders, considering that the SEC had previously greenlighted Options on ETFs linked with Bitcoin Futures ETF products.

Inarguably, pursuing a lawsuit may be Grayscale’s next line of action especially after it was the only strategy that could get the SEC to reconsider its GBTC conversion request last year. 

While the wait for the Options product lingers on, Grayscale Investments is also waiting for the agency’s verdict on its Ethereum ETF proposal.