- The SEC recently approved three Bitcoin futures ETFs but has not yet permitted one that tracks the cryptocurrency’s spot market price.
- A spot ETF would provide direct exposure to BTC by tracking the current spot market price of the cryptocurrency.
- The SEC has historically rejected spot ETF applications on the grounds that the crypto sector is not yet ready and investors could be exposed to fraud and price manipulation.
Grayscale has told the U.S. Securities and Exchange Commission (SEC) that the agency’s disparate treatment of Bitcoin futures ETFs and spot Bitcoin exchange-traded products (ETPs) is inconsistent. In a letter addressed to Vanessa Countryman, the SEC’s secretary, Grayscale argues the regulator lacks a sound basis for continuing to deny spot Bitcoin ETFs after allowing futures-based alternatives.
Grayscale’s filing follows the SEC’s recent rejection of another physically settled BTC ETF proposal, this time from VanEck, which joins a long list of spot ETF applications that the agency has turned down. The investment manager—seeking approval to convert its flagship Grayscale Bitcoin Trust (GBTC) into a spot-based exchange-traded product—questions why the SEC has greenlit futures-based Bitcoin ETFs but refused products that track the actual cryptocurrency’s spot price.
Recently, the SEC allowed trading in futures-based ETFs from ProShares, Valkyrie, and VanEck. Those approvals came amid public statements from SEC Chair Gary Gensler that appeared to favor futures-based structures over spot-based offerings. Grayscale argues that this distinction is untenable. “The Commission has no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not,” the letter states.
According to Grayscale, if the SEC continues to approve futures-based products while denying spot-based applications—such as its NYSE Arca filing—the agency would be enforcing that very inconsistency. The firm contends that approving futures ETFs but rejecting spot ETPs may violate the Administrative Procedure Act (APA) because the SEC’s actions are arbitrary and not sufficiently justified given the regulatory developments since earlier denials.
On November 12, the Commission rejected VanEck’s spot Bitcoin ETF application, citing concerns that the listing exchange had not met the requirements of the Securities Exchange Act of 1934. The SEC’s primary stated concern is that the crypto market still cannot adequately “prevent fraudulent and manipulative acts and practices,” which the agency says undermines investor protection for spot-based products.
Grayscale’s letter challenges that rationale, noting the increased regulatory oversight and market evolution since the SEC first denied a spot BTC ETF in 2017. The firm argues that the agency’s previous reasoning does not reflect significant regulatory and competitive developments across crypto markets and related infrastructure.
The company is urging the SEC to approve its application to list and trade BTC on the NYSE, emphasizing that while Bitcoin has become a widely held investment asset, U.S. investors currently lack access to a product that closely tracks the cryptocurrency’s spot price. Grayscale maintains that a spot ETF would offer a simpler, more direct vehicle for investors seeking exposure to Bitcoin’s market value.
The SEC is expected to issue an initial decision on Grayscale’s conversion of GBTC into a spot-traded product before the end of the year.