Grayscale has submitted the opening brief in its lawsuit against the Securities and Exchange Commission (SEC), disputing the agency’s decision to deny its application to convert the GBTC into a spot Bitcoin ETF.

In an opening court brief filed on Tuesday, Grayscale, which has been attempting for years to convert its flagship Grayscale Bitcoin Trust fund (GBTC) into a spot BTC ETF, labeled the SEC’s decision “arbitrary, capricious, and discriminatory.”

As previously reported, the SEC refused Grayscale’s application on June 29, citing fraudulent and manipulative conduct and practices, as well as user protection concerns.

Following that, Grayscale Senior Legal Strategist Donald B. Verrilli, a former U.S. Solicitor General and Munger, Tolles & Olson partner, filed a petition for review to begin the litigation process.

The opening brief highlights Grayscale’s legal claims, claiming that the “test the SEC has applied to Bitcoin-related ETFs, and only Bitcoin-related ETFs, is defective and has been inconsistently applied with a “special severity” to identify Bitcoin ETFs.”

According to the brief, the SEC has approved multiple Bitcoin futures ETFs since October 2021, when the agency approved the first-ever Bitcoin-related ETF. It then stated that because the spot price of Bitcoin in both spot and futures ETFs is subject to the same risks, it makes no sense to approve one while rejecting the other.

The GBTC Discount Has Reached Its Peak
The GBTC has lately fallen to a new record low, trading at about a 36% discount to BTC spot prices, due to diminishing institutional interest in Grayscale’s GBTC or the fact that big players are selecting other alternative vehicles for BTC investments like ETFs.

The fund is currently trading at a 35% discount, the highest discount in its history. According to a recent Delphi Digital analysis, the GBTC has been trading at a -19% discount for the last 19 months. Since 2015, the fund has been trading at a positive premium of roughly 20%.

The GBTC is a digital currency investment product that enables investors to obtain exposure to Bitcoin without purchasing or trading spot BTC. It operates as a fictitious ETF, letting individual investors to buy and sell it through their own brokerage accounts.