The Securities Exchange Commission has rejected an application from Grayscale Investments to convert its Grayscale Bitcoin Trust (GBTC) to an ETF.
Grayscale has been publicly pushing the effort since April of last year.
The SEC ruled that the Grayscale spot ETF application did not do enough to protect investors from “fraudulent and manipulative acts and practices.”
Upon SEC’s announcement, Grayscale CEO Michael Sonnenshein quickly took to Twitter to announce the legal action.
Grayscale is filing a “petition for review” with the United States Court of Appeals for the District of Columbia to challenge the decision to deny the conversion of Grayscale Bitcoin Trust to a spot Bitcoin ETF.
Grayscale, founded in 2013, is a subsidiary of Barry Silbert’s Digital Currency Group. The company provides market information, investment products, and exposure to digital assets.
Since its launch, Grayscale has filed several applications for Bitcoin ETFs.
An exchange-traded fund (ETF) bundles securities like stocks or commodities, allowing investors to buy shares on the public market without directly owning the assets—in this case, Bitcoin.
Last October, the SEC finally allowed a Bitcoin futures ETF, which offers derivative contracts that speculate on the future price of Bitcoin. It has still not allowed a Bitcoin spot ETF, which would be tied to Bitcoin’s current price.