Key takeaways:
- Grayscale urges that all new spot Bitcoin ETFs be approved by the SEC simultaneously to prevent anyone from having an edge.
- The most recent surveillance-sharing agreements (SSAs) between Coinbase and the spot ETF applicants are “not a new idea” and would not comply with SEC requirements.
Crypto fund manager Grayscale is urging that all new spot Bitcoin Exchange Traded Funds (ETFs) be approved by the Securities and Exchange Commission (SEC) simultaneously to prevent anyone from having an edge.
According to a blog post by Grayscale Chief Legal Officer, Craig Salm, on July 27, Grayscale’s legal team wrote to the SEC regarding eight spot Bitcoin ETF registrations, including its own, arguing that the organization shouldn’t pick “winners and losers” and instead opt for a fair and orderly decision.
The blog post claims that because the two fund kinds are “inextricably linked,” the SEC may approve the spot ETFs based on its approval of Bitcoin futures ETFs.
According to Grayscale, the most recent surveillance-sharing agreements (SSAs) between Coinbase and the spot ETF applicants are “not a new idea” and would not comply with SEC requirements. Grayscale asserted:
“Without disputing the usefulness of information obtainable under a surveillance-sharing agreement with a spot bitcoin trading venue,”
SSAs with Coinbase have just been added to ETF filings from Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest. For the SEC to keep an eye out for any potential market manipulation or erroneous trading activity, Coinbase will submit information about its trading books and other data.
The SEC opposed the ETFs in late June on the grounds that the absence of SSAs made them unnecessary, given the potential for manipulating the cryptocurrency markets.
Grayscale asserted, however, that the SSAs “would neither satisfy nor be necessary” following SEC requirements because Coinbase is neither registered with the SEC as a securities exchange or broker-dealer nor with the Commodity Futures Trading Commission (CFTC) as a futures exchange.
By licensing the ETFs, the SEC would “improperly grant these proposals an unfairly discriminatory and prejudicial first-mover advantage,” the document continued. This would be “a positive but sudden and significant change” in the SEC’s application of its criteria.
The SEC previously turned down Grayscale’s attempt to turn its Grayscale Bitcoin Trust (GBTC) into an ETF, but several bitcoin ETFs based on futures have been approved. In June last year, Grayscale brought legal action against the SEC for rejecting the conversion.
