The judge asked the SEC to explain the relationship between Bitcoin futures and spot prices

It is reported that the two sides have held a court debate in the District of Columbia Court of Appeal against the rejection of Grayscale Investment’s application to convert GBTC into Bitcoin spot ETF by the United States Securities and Exchange Commission (SEC). The SEC believes that Bitcoin futures ETF is more resistant to manipulation than the spot market, and takes this as one of the reasons for rejecting Grayscale’s spot ETF application.

Interpretation of this information:

Grayscale Investments, the world’s largest digital asset manager, has been facing regulatory hurdles for its application to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot ETF. The United States Securities and Exchange Commission (SEC) rejected the application citing concerns over market manipulation.

The debate between the two sides was held in the District of Columbia Court of Appeal where Grayscale argued that a spot ETF would provide investors with easier access to Bitcoin and a better investment vehicle.

The SEC, however, believes that a futures ETF would provide better protection to investors as the futures market is more resistant to manipulation. In a recent interview, SEC commissioner Hester Peirce stated that she believes that the SEC is preventing the approval of a Bitcoin ETF because of a fear of market manipulation.

This decision is not surprising, as the SEC has historically rejected several Bitcoin ETF applications. The SEC has previously cited concerns over market manipulation, lack of transparency, and regulation as reasons for the rejections.

In recent months, the cryptocurrency industry has witnessed increased institutional adoption, with prominent companies such as Tesla and MicroStrategy investing in Bitcoin. This increased adoption has led to a surge in demand for Bitcoin investment vehicles.

Grayscale’s Bitcoin Trust is the largest Bitcoin investment vehicle with over $37 billion in assets under management. Despite its success, Grayscale has been facing competition from emerging cryptocurrency ETFs.

Overall, the debate between Grayscale and the SEC highlights the challenges faced by the cryptocurrency industry in gaining mainstream adoption. While the industry has made progress in recent years, regulatory concerns and the lack of clear guidelines continue to create uncertainty for investors.