Bitwise Not Ruling Out Suing the SEC, Exec Says
Chief Compliance Officer Katherine Dowling told CoinDesk TV that litigation is not off the table after the regulator denied its spot bitcoin ETF application
Matt Hougan, CIO of Bitwise, at Permissionless 2022 | Source: Ben Solomon
key takeaways
- Bitwise CIO previously told Blockworks the firm would first seek a “reasonable research pathway” to address SEC concerns
- Grayscale’s head of legal said a decision on its lawsuit could take two years
As Grayscale moves forward with a lawsuit against the SEC for denying its spot bitcoin ETF application, Bitwise Asset Management has not ruled out doing the same.
Bitwise Chief Compliance Officer Katherine Dowling said in a Tuesday interview on CoinDesk TV that such litigation would be about “answering technical questions,” noting that she “would not put it off the table.”
“I think it’s more productive if you can engage in a dialogue, figure out what the obstacles are and answer those questions together in a productive manner,” she said. “But that isn’t always the approach that is going to work.”
A Bitwise spokesperson declined to comment.
The Bitwise filing rejected by the SEC last month was the firm’s second attempt to launch a spot bitcoin ETF. The San Francisco-based company had filed for one in 2019, but withdrew its request in January 2020 amid regulatory concerns. Bitwise refiled last October, including roughly 150 pages of research within the application focused on price discovery in the crypto markets.
A week before the decision, Bitwise Chief Investment Officer Matt Hougan told Blockworks that despite Grayscale’s plans to sue the SEC, Bitwise would likely stick with its research-centric approach.
“The SEC is clearly engaged in this space and they’re asking good questions,” Hougan said at the time. “In the case they disapprove our application, we’ll have to see what the content of that disapproval is and whether there’s a reasonable research pathway to answer it or not.”
Grayscale filed a petition for review with the US Court of Appeals for the District of Columbia Circuit on June 29. The company argues that the SEC is acting “arbitrarily and capriciously” under the Administrative Procedures Act (APA) in denying its proposal to convert the Grayscale Bitcoin Trust (GBTC) to an ETF.
Grayscale Chief Legal Officer Craig Salm said in a Q&A posted on the company’s website this week that a court date could take between 12 months and two years.
Leah Wald, CEO of Valkyrie Funds, previously said in a series of June 30 Twitter posts that suing the SEC is not likely to succeed, noting that regulators could potentially approve a spot bitcoin ETF before Grayscale’s lawsuit ends.
Dave Nadig, financial futurist at VettaFi, previously told Blockworks the lawsuit “a very tough case for [Grayscale] to win,” noting that the agency has “extremely clear authority” to regulate rule-making about the activities of securities exchanges.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
