The US Securities and Exchange Commission has turned down Grayscale’s request to approve a Bitcoin ETF. Earlier on, Grayscale sent an application to the SEC for the conversion of $13.5 billion worth of BTC to an Exchange-Traded Fund (ETF).
The asset management company was initially optimistic that its request will be granted. However, things did not go as planned. SEC declined the request, stating several reasons why the Bitcoin ETF will not be approved.
The SEC Attacks Tether
Tether has been attacked severally for its lack of transparency in the crypto ecosystem. In its rejection of Grayscale’s request, the SEC cited Tether, pointing out its negativities. The SEC believes Tether has been involved in “manipulative activities” in the crypto ecosystem.
While Tether is backed by its massive dollar reserves, the credibility of the company’s claims has been questioned by onlookers. Tether has also been engaged in a few legal cases. Although the company has come out victorious in every instance, the company has lost the trust of many investors.
The SEC claims that the path which Tether has trodden in the past does not put cryptocurrencies in a good light. In addition to that, several Bitcoin trading platforms are known for their manipulations.
No Bitcoin ETF – What Next?
For several years, Grayscale has exposed its clients to the GBTC, the Grayscale Bitcoin Trust. GBTC usually trades at a premium or a discount depending on demand at a particular time. Grayscale’s Bitcoin Trust has sometimes traded as high as 50% above the standard price of BTC. This has triggered clients to request cheaper alternatives to Bitcoin exposure.
The approval of a Bitcoin ETF would have served as a cheaper alternative for clients who want to gain exposure to Bitcoin. However, it seems that option may not be available anytime soon. Clients who do not want to purchase Bitcoin from regular exchanges will just have to stick to GBTC in the meantime.