Grayscale Investments, a prominent digital asset management firm, has called upon the US Securities and Exchange Commission (SEC) to reassess its stance on converting the Grayscale Bitcoin Trust into an Exchange-Traded Fund (ETF), in a compelling letter submitted by legal firm Davis Polk.

The letter highlights a recent decision by the US Court of Appeals for the D.C. Circuit, which invalidated the SEC’s previous disapproval order concerning the trust. Grayscale’s legal team argues that after thoroughly analyzing the court’s opinion, the SEC should conclude that there are no grounds for treating the trust differently from other ETFs investing in Bitcoin futures contracts.

Grayscale contends that their proposed product is not materially different from existing Bitcoin futures ETFs. They note that the SEC’s rejection of spot Bitcoin ETFs is primarily based on the exchange’s ability to demonstrate a comprehensive surveillance-sharing agreement with a regulated market. Grayscale believes it has met this requirement, as their Bitcoin ETF demonstrates similar characteristics to approved Bitcoin futures ETPs across relevant regulatory factors.

Furthermore, Grayscale emphasizes the correlation between the underlying assets of Bitcoin and Bitcoin futures. They highlight identical surveillance-sharing agreements with the Chicago Mercantile Exchange (CME), which they argue are equally effective in detecting fraudulent or manipulative conduct in both markets.

The letter also reveals that there has been no communication between the SEC and Grayscale since the court ruling eight days ago. Grayscale requests a meeting with the SEC to discuss next steps, indicating their commitment to a productive dialogue.

Notably, Grayscale’s CEO, Michael Sonnenshein, expressed the company’s determination on Twitter, stating their legal team submitted a comment letter to the SEC on behalf of Grayscale investors. He stressed their anticipation of continuing the dialogue as they advance with the conversion process for the Grayscale Bitcoin Trust.

Finance lawyer Scott Johnsson from Davis Polk suggested that the SEC may be pressured to approve Grayscale’s ETF application rather than seeking alternative differentiating factors with futures-based products. He anticipates that the SEC will act accordingly, noting that any valid grounds for differentiation should have already been raised in previous rejections.

While Grayscale’s letter projects confidence, it is important to note that the court’s decision does not guarantee SEC approval but mandates a review of the rejection. The crypto community and investors are eagerly awaiting the SEC’s next move in this high-stakes battle for a Bitcoin Spot ETF.

As of now, BTC is trading at $26,766.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.