Grayscale filed a lawsuit against the United States Securities and Exchanges Commission after its application to convert the Grayscale Bitcoin Trust (GBTC), into a Bitcoin exchange-traded fund ETF (ETF), was denied. The community reacted to these events with a variety of reactions. They accused the SEC, and even suggested different solutions.
Redditor u/ThatsMRcurmudgeon2u, who introduced themself as a securities lawyer, weighed in on the matter. Redditor u/ThatsMRcurmudgeon2u claims that many expected the lawsuit. Gary Gensler, the SEC Chair, has stated that he wants all exchanges to register with him. Redditor also accused SEC of holding GBTC hostage.
Jake Chervinsky, a lawyer, tweeted that the denial of ETFs was “deeply disappointing” because it defied federal law and commonsense. He pointed out that investors should be protected by the SEC and suggested that an ETF would be a better product.
Ann, a Twitter user, claimed that an ETF that shorts Bitcoin was approved by the SEC. Ann suggested that it might be trying to “suppress Bitcoin’s price.” Ann countered that this is not the SEC’s role.
Vijay Boyapati, a Bitcoin advocate and author, suggested a different path. Boyapati suggested that it would be a better idea to “wind down” the fund and return Bitcoin to investors. Grayscale’s fees of 2% were criticized by the author, and Boyapati urged the firm “to do the right thing.”
It would be better to close the fund and give the #bitcoin underlying to investors. Investors are being paid a ridiculous 2% annually. Grayscale, do the right thing.
— Vijay Boyapati (@real_vijay) June 30, 2022
Redditor u/Percyheckendorf argued against the SEC’s decision to deny an ETF, arguing that pension funds will “stuck purchasing equities,” which have less potential than Bitcoin.
Related: Hester Peirce critiques lack of legal clarity regarding the Elusive Bitcoin ETF
Grayscale informed investors Monday that the SEC had received 11,400 letters regarding the proposed Bitcoin ETF in a letter. The firm stated that 99% of these letters were in support for the ETF. Despite all these letters of support, the ETF was not approved.