Five amicus briefs widened Grayscale’s challenge to the SEC’s bitcoin-fund rejection

Five amicus submissions filed in the U.S. Court of Appeals for the D.C. Circuit on October 18, 2022 broadened institutional support for Grayscale Investments’ attempt to overturn the Securities and Exchange Commission’s rejection of a proposal to list shares of Grayscale Bitcoin Trust on NYSE Arca.

The filings did not change the legal status of the trust or authorize a spot-bitcoin exchange-traded product. They did, however, turn Grayscale’s dispute into a wider test of how consistently the SEC was treating investment products tied to bitcoin’s spot and futures markets.

One court-stamped brief represented the Blockchain Association, Chamber of Digital Commerce, Chamber of Progress and Coin Center. Separate submissions came from Coinbase, NYSE Arca, the U.S. Chamber of Commerce, and a group organized through the Investor Choice Advocates Network. Collectively, the filings brought arguments from cryptocurrency advocates, a regulated exchange, a trading and custody company, business organizations, academics and former regulators into case No. 22-1142.

The dispute before the court

NYSE Arca had proposed listing shares of Grayscale Bitcoin Trust under its rule for commodity-based trust shares. The SEC rejected that proposed rule change on June 29, 2022, concluding that the exchange had not demonstrated compliance with Exchange Act requirements concerning fraud, manipulation and investor protection.

Grayscale petitioned the D.C. Circuit to review the order. Its central position was that the SEC had treated comparable products differently: the agency had permitted exchange-traded products holding bitcoin futures while refusing the proposed product holding bitcoin itself.

That comparison was disputed rather than established fact on October 18, 2022. The SEC’s order distinguished the surveillance arrangements and evidentiary record associated with the regulated futures market from those offered for the proposed spot product. Grayscale and its supporters argued that bitcoin futures prices depended on the same underlying spot market, making the agency’s distinction legally and economically unsustainable.

What the amici added

The four-member cryptocurrency-policy coalition argued that a spot-bitcoin exchange-traded product would give investors exposure through a familiar, regulated securities-market structure. It characterized the SEC’s approach as inconsistent with its treatment of bitcoin-futures products and asked the court to reverse the order.

Coinbase’s filing emphasized its role as a source of pricing data for the index used by Grayscale Bitcoin Trust and argued that surveillance and transparency in the spot market were stronger than the SEC had recognized. NYSE Arca, the exchange seeking to list the shares, addressed the relationship between spot and futures pricing. The U.S. Chamber framed the dispute as an administrative-law problem involving predictable treatment of market participants.

These were advocacy claims submitted by interested amici, not judicial findings. Their importance on October 18 lay in the range of institutions willing to contest the SEC’s reasoning and in the questions placed before the court: whether the products were materially comparable, whether the agency had adequately explained different outcomes, and what evidence an exchange needed to support a spot-bitcoin listing.

Why the filing date mattered

The submissions marked the first concentrated outside intervention in Grayscale’s appellate case after the company filed its opening brief. The proceeding offered a route for testing the SEC’s spot-bitcoin policy through administrative law rather than waiting for Congress or a new agency rule.

For the market, the immediate consequence was procedural. Grayscale Bitcoin Trust remained an over-the-counter trust, and no spot-bitcoin exchange-traded product received approval on October 18, 2022. The briefs created no guaranteed outcome and supplied no basis for inferring a change in bitcoin’s value.

Context established after October 18, 2022

On August 29, 2023, the D.C. Circuit granted Grayscale’s petition and vacated the SEC order, finding that the agency had not adequately explained its different treatment of materially similar spot and futures products. That decision confirms the eventual significance of the October 18 filings, but it was not knowable when the briefs were submitted and did not itself approve Grayscale’s proposed conversion.