Key takeaways:
- The asset manager’s flagship Bitcoin fund is being changed into a spot ETF, and Grayscale has informed the SEC that it no longer has any legal justification.
- The SEC should find “no grounds” to treat the GBTC differently from Bitcoin futures ETFs whose filings “the Commission has previously approved.”
The asset manager’s flagship Bitcoin fund is being changed into a spot Exchange Traded Fund (ETF), and Grayscale has informed the Securities and Exchange Commission (SEC) that it no longer has any legal justification to do so.
Following the regulator’s court defeat on the conversion of the Grayscale Bitcoin Trust (GBTC), Grayscale’s attorneys wrote to the SEC on September 5 to request a meeting to discuss the next steps. Grayscale penned:
“Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.”
According to Grayscale, the SEC should find “no grounds” to treat the GBTC differently from Bitcoin futures ETFs whose filings “the Commission has previously approved.”
The SEC had rejected Grayscale’s request to change its GBTC into a spot Bitcoin ETF, but on August 29, a United States Appeals Court overturned that decision.
As opposed to the Exchange Act’s mandate that regulations be devised to control “fraudulent and manipulative acts and practices,” according to Grayscale, any additional justification for rejecting the conversion would have been evident by this point.
According to Grayscale, its fund conversion application has been languishing for almost three times as long as SEC regulations allow.
Joseph A. Hall, who also wrote Grayscale’s letter to the SEC in July pleading with it to accept all pending ETF applications at once, concluded his most recent letter with these words:
“We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible.”
Since the court’s decision on August 29, the GBTC discount, which measures how much an ETF is trading above or below its net asset value, has decreased to 19.9%.
The bear cycle bottom that followed the FTX collapse in December 2022 saw the discount for GBTC close to negative 50%.
