Bitwise Asset Management will consider suing the U.S. Securities and Exchange Commission after the regulator rejected a Bitcoin exchange-traded fund filing, potentially following in the footsteps of Grayscale Investments in an effort to clarify how the government regulates the crypto industry.
Katherine Dowling, the Bitwise chief compliance officer, told Coindesk TV that suing the SEC is “not off the table” after the agency on June 29 turned down her company’s second attempt to create a spot Bitcoin fund.
“This type of litigation is really about answering technical questions,” said Dowling, a former federal prosecutor. Dowling said, however, that she does not believe litigation is the most efficient approach.
New York-based Grayscale sought a review with the U.S. Court of Appeals in Washington just an hour after its spot bitcoin ETF was rejected by the SEC, also on June 29.
NYSE Acra filed for a spot bitcoin ETF on Bitwise’s behalf in 2019 but withdrew the application after the SEC rejected similar proposals. The SEC has approved funds that invest in bitcoin derivatives but considers that the Bitwise offering based on the spot price of the cryptocurrency is too susceptible to potential fraud and manipulation to be listed for trading.
In October, the company filed for another ETF as it felt more prepared after meeting with the SEC about a dozen times to discuss the crypto market and research.
“Historically, we have had a very active and positive dialogue with the SEC about what are the obstacles, what are the questions,” said Dowling.
After being denied despite what she described as in-depth research and frequent conversations with regulators, Dowling said she believes litigation is a potential method the crypto community can use to gain clarity about federal rules for the industry.