SEC rejects Grayscale Bitcoin spot ETF, while Jacobi announces the first Bitcoin ETF in Europe

    02 Jul 2022
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    Bitcoin fell over 5% following the US Securities and Exchange Commission (SEC) rejected the Bitcoin spot ETF proposed by Grayscale. The crypto fund has launched a lawsuit against the SEC after the regulator’s denial. Meanwhile, Jacobi Asset Management announced the launch of Europe’s first Bitcoin ETF on the Euronext Amsterdam exchange.

    Thursday morning, Bitcoin fell over 5% as low as $18,930. Over June, Bitcoin lost more than 37% – its worst monthly decline since December 2018. Thursday’s drop comes after the SEC rejected Bitcoin spot ETFs proposed by both Grayscale and Bitwise, while continued inflation fears also weigh on sentiment in the broader crypto market.

    The SEC’s rejection of Grayscale’s proposed ETF was a key factor dragging down crypto markets early Thursday.

    “The next few months for crypto are going to be very telling,” Grayscale CEO Michael Sonnenshein told Yahoo Finance.

    As previously reported, Grayscale had sought approval from the SEC to convert GBTC into an exchange-traded fund (ETF) that holds Bitcoin and relies on “authorized participants” to continuously redeem and create shares that could close this discount.

    On Monday, Grayscale attempted to show regulators an ETF would be operationally viable, announcing Wall Street firms Jane Street and Virtu Finance had agreed to fill the authorized participant role as long as Grayscale received approval from the SEC.

    As the SEC showed in its filing on Wednesday, the regulator continues to harbor concerns that “the price of Bitcoin is subject to manipulation on unregulated platforms,” and the approval could invite additional manipulation.

    Following this, Grayscale has launched a lawsuit against the SEC after the regulator denied the group’s bid to convert the world’s largest crypto investment vehicle into a fund listed on Wall Street exchanges, the FT reported.

    Grayscale’s failure to secure regulatory consent is a blow to the crypto industry, which had been hoping its approval would ease the financial crisis sweeping the sector. Converting Grayscale into an ETF would make it easier and quicker for shareholders to redeem their holdings and stabilize the price of Bitcoin.

    Grayscale is one of the world’s largest purchasers of the digital token, but the trust trades at a discount to its net asset value. The falling price of Bitcoin makes it more costly for the trust’s shareholders if they want to buy more tokens.

    After the ruling, Grayscale filed a petition for review with the appeals court in the District of Columbia to challenge the SEC’s rejection. The company withdrew another attempt to convert to an ETF in 2017. The SEC declined to comment.

    Michael Sonnenshein said in a statement that he was “deeply disappointed” and “vehemently” disagreed with the SEC decision. He added that Grayscale would continue to “leverage the full resources of the firm to advocate for our investors and the equitable regulatory treatment of Bitcoin investment vehicles.”

    Meanwhile, Jacobi Asset Management declared on June 30 that it would be launching Europe’s first Bitcoin ETF on the Euronext exchange. According to Reuters, the company noted that the Jacobi ETF would commence trading activities in July this year on Euronext Amsterdam under the symbol of BCOIN.

    “The Jacobi Bitcoin ETF will enable investors to access the underlying performance of this exciting asset class via a well-established and trusted investment structure,” said Jamie Khurshid, the CEO of Jacobi Asset Management.

    Last week, ProShares announced plans to launch an ETF named ProShares Short Bitcoin Strategy ETF (Ticker: BITI). This ETF aims to short the price of Bitcoin because, according to the CEO, Michael Sapir, “As recent times have shown, Bitcoin can drop in value.” Then he added, “BITI enables investors to conveniently obtain short exposure to Bitcoin through buying an ETF in a traditional brokerage account.”

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