Grayscale Investments, sponsor of the Bitcoin Investment Trust, which had applied for “approval to list shares of the Bitcoin Investment Trust on NYSE Arca,” announced they have withdrawn the application.

They did not list any specific reason, citing SEC’s rejection of two similar applications “based upon the SEC’s analysis of the current state of regulation of the underlying digital currency markets and related derivatives markets.”

But just days before the application was withdrawn, Matt Corallo, a former Blockstream employee who now works at ChainCode Labs – a seemingly new for-profit start-up that appears to lack any product save for hiring Bitcoin Core developers – complained to the SEC, asking them to reject this specific bitcoin ETF.

Corallo opens his comments by stating he is “a long-time developer of Bitcoin (around the 10th publicly recorded individual to contribute to the Bitcoin codebase),” and “an expert on Bitcoin’s operation.”

The 24 year old then says he has “very grave concerns with the proposed rules for the maintaining of Bitcoin deposits and the lack of consumer protection in the event of Bitcoin Network rule changes in the current filings.”

The comments are made in the context of the long-standing blocksize debate whereby Matt Corallo is now advocating against 2x, something he personally signed as being in agreement back in 2015 during the Hong Kong round-table.

He has now made a complete u-turn without giving any good reason, and even more so, he appears to not just advocate against it, but seems to expand great effort to argue against something he himself signed.

He does not reveal such matters to the SEC in his comments, focusing instead on what appears to be technical arguments, stating:

“In the event of a permanent fork… they will be allowed to select any cryptocurrency resulting from a permanent fork which they will term Bitcoin, with no clear restrictions. This creates a gaping divergence of interest between the Sponsor and the investors in the proposed ETP.”

This ignores the very objective manner of deciding what exactly is bitcoin as stated in the whitepaper. That being the longest chain, which should correspond to the highest price as miners are very much profit motivated as we have seen.

But the very well written letter, which indicates some considerable time was spent going through all the documents suggesting it only bears Corallo’s name and may have instead been drafted by lawyers, doesn’t quite expound on any potential solution, stating:

“Additional rules must be put in place to protect investors in the event of a permanent fork of the Bitcoin network such as the one DCG and its portfolio companies is advocating for now, rules I believe to be rather straightforward and simple to write.”

So simple in fact that he didn’t quite bother to write them at all. Not that it is his place, so being a 24 year old coder barely out of university rather than a lawyer, to write any such rules, nor is it quite the case that we don’t have an example of a traded ETN that has stated how they would proceed.

XBT Provider, for example, which is traded on Sweden’s Nasdaq, said in regards to the Bitcoin Cash fork:

“As the holder of bitcoin, the group companies of the Guarantor will be entitled to hold both coins resulting from any fork… The Issuer and Guarantor will monitor the relative success (or lack thereof) of the resultant coins, with a particular focus on monitoring the extent to which a consensus develops within the bitcoin community as to which coin is to be regarded as being ‘bitcoin’.”

Once such clarity is reached, they can sell the minority coins for the majority coins and correspondingly increase the share of their investors, simply return them, or apply for a minority coin ETF. Something which, so having a duty of care, they are most probably bound to do.