Grayscale Investments has hired a former U.S. Attorney General in preparation for a potential legal dispute with the U.S. Securities and Exchange Commission (SEC) should the regulator reject its application for a Bitcoin (BTC) exchange-traded fund (ETF) in 6th of July.
The company has been awaiting an SEC decision to convert its $19.8 billion flagship Grayscale Bitcoin Trust (GBTC) into a spot-based ETF since filing its application with the regulator on October 19, 2021.
The SEC has delayed its decision on several occasions, once in December and again in February. The final decision on the application is scheduled for July 6.
Jake Chervinsky, head of policy at cryptocurrency advocacy group Blockchain Association, said that adding that firepower to Grayscale’s legal team was a “strong move” and that the SEC would have little chance of “surviving a legal challenge” if it decided to do so. revoke approval now.
Strong movement. @Grayscale means business.
The SEC deadline for approving or denying the GBTC to ETF conversion request is July 6. Undoubtedly, it must be approved. I don’t see how the SEC survives a legal challenge if not, especially one led by Don Verrilli.
Mark your calendar. https://t.co/ZbZ7oTXhHR
— Jake Chervinsky (@jchervinsky) June 7, 2022
In March, Grayscale CEO Michael Sonnenshein told Bloomberg that his company would consider action under the Administrative Procedure Act (APA) if the application for its Bitcoin Spot ETF is denied by the financial regulator.
He has been a vocal critic of the regulator, which approved cryptocurrency futures ETF products in October 2021 but has yet to do so for a spot ETF equivalent.
Donald B. Verrilli Jr., the new hire, is a former US Attorney General who served from 2011 to 2016 under the Obama administration. He is currently a partner at the Californian law firm Munger, Tolles & Olson, and founded their Washington DC office in 2016.
On Twitter, Grayscale explained that the attorney has been involved in more than 50 cases before the US Supreme Court, including several that directly dealt with violations of the Administrative Procedure Act (APA).
He will serve as Senior Legal Strategist, working alongside his attorneys at Davis Polk & Wardwell LLP and his in-house counsel, including Craig Salm, who serves as Chief Legal Officer.
Don’s legal acumen is unparalleled. There is no better advocate we could have to join our legal strategy team with @DavisPolkReg as we continue advocating conversion $ GBTC to a place #Bitcoin ETF. https://t.co/ZruXc1aiQ6
— Craig Salm (@CraigSalm) June 7, 2022
Grayscale described Verrilli as one of the most experienced attorneys in the country with “a deep understanding of legal theory, administrative procedure and the practical issues of working with the judiciary.”
“We are thrilled to have him join our team as we work towards a positive resolution for investors and the general public.”
As we enter the last month before an answer is due in our app to convert $ GBTC for an ETF, we hired Donald B. Verrilli Jr., former US Attorney General, as additional legal counsel. A brief on why:
— Shades of Gray (@Grayscale) June 7, 2022
Meanwhile, Citadel Securities, a market maker that can provide liquidity for cryptocurrency ETFs such as the one proposed by Grayscale on Tuesday, said it is open to supporting cryptocurrency ETFs but will not do so without regulatory approval.
“We will be ready if and when these products are approved, but we are taking a measured approach,” Kelly Brennan, head of Citadel ETF, said in an interview with Bloomberg.
Market makers are the main providers of liquidity in the ETF ecosystem as they ensure the continuous and efficient trading of ETFs.
Related: Why the world needs a Bitcoin ETF in the US: 21Shares CEO explains
Elsewhere in the world, cryptocurrency-linked ETFs have been gaining increasing popularity, with total assets invested in cryptocurrency ETFs and exchange-traded products (ETP) globally reaching $16.28 billion by the end of Q1 2022. , according to data from ETF research firm ETFGI.
In February 2021, Canada debuted its first Bitcoin ETF, the Purpose Bitcoin ETF, becoming one of the first countries in the world to adopt a spot Bitcoin ETF.
On May 12, Australia launched its first cryptocurrency ETFs, including a Bitcoin ETF from Cosmos Asset Management, as well as BTC and Ether (ETH) ETFs from 21Shares. Another two cryptocurrency-backed ETFs launched on Monday, June 6.
In May, Grayscale began trading its first European ETF, called the Grayscale Future of Finance UCITS ETF, which has listings on the London Stock Exchange, Borsa Italiana, as well as Deutsche Börse’s Xetra electronic trading platform.