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Grayscale CEO Calling on Regulators to Act

12 Oct, 20222 min readRegulation
Grayscale CEO Calling on Regulators to Act

In a recent interview with CNBC's "Squawk Box," Grayscale CEO Michael Sonnenshein said that the entire industry is asking for clear regulatory frameworks:

This is also about American competitiveness, and not squandering innovation, so we are calling on these parties to act.

The largest cryptocurrency asset manager recently described the U.S. Securities and Exchange Commission's rejection of its application to convert Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund.

Grayscale, which is a subsidiary of crypto giant Digital Currency Group, sued the SEC in late June over the regulator's decision regarding its Bitcoin ETF proposal. The agency cited oft-repeated concerns about fraud and manipulation as well as lack of investor protection in its rejection. Grayscale, however, vehemently disagrees with the decision given that the regulator has already approved a futures-based ETF.

Grayscale's lawyers argue that spot-based and futures-based ETFs face the same risks, which is why the company believes that the SEC's rejections are "capricious" and "arbitrary."

"Where do these futures contracts get their pricing? From the underlying Bitcoin market. That's the same market that a Bitcoin spot ETF, like GBTC, would derive its pricing. So, there is a fundamental flaw in the thinking here," Sonnenshein said.

The Grayscale CEO hopes that GBTC will not get caught in the crosshairs between the SEC and the CFTC, its sister regulatory agency, over who gets to have jurisdictional authority over crypto.

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