The SEC was not immediately available for comment outside of normal U.S. working hours.
Grayscale argues the SEC’s position is inconsistent in light of previous decisions to greenlight other bitcoin-based ETFs, including those based on futures markets and one that allows investors to short — or bet against — the cryptocurrency.
Crypto bulls had pinned their hopes on the SEC approving the first U.S. spot bitcoin ETF, a move that would potentially open the cryptocurrency up to more institutional investment.
The move to deny Grayscale’s bitcoin ETF application adds to a slew of negative news around crypto lately. Earlier this week, embattled crypto hedge fund Three Arrows Capital collapsed into liquidation.
Bitcoin was trading at $20,085 late Wednesday, down 1% in the last 24 hours. Cryptocurrencies have lost a combined $2 trillion in over market value since the peak of the bubble in November 2021.