Grayscale submits its Bitcoin ETF application to the SEC on November 22 with an amendment, a typical reporting method.
On November 22, Grayscale revised their application to the U.S. Securities and Exchange Commission (SEC) on its upcoming spot Bitcoin Exchange-Traded Fund (ETF). The filing is an addendum, which companies that have complied with reporting requirements frequently use.
Grayscale Files an Amended Application
The proposed ETF from Grayscale entails transforming an already-existing investment vehicle. Grayscale, the SEC, and NYSE Arca have recently had talks that suggest there is still discussion over the ETF’s possible listing. Grayscale’s strategy has raised hopes for the acceptance of ETFs.
The SEC made a mistake, according to a three-judge panel of the District of Columbia Court of Appeals, when it rejected Grayscale’s proposed Bitcoin ETF without providing a compelling justification. Grayscale pleaded with the SEC to consider and approve its ETF registration in the wake of this decision.
Grayscale’s legal counsel, Davis Polk, highlighted in a letter the best use of available resources and recommended that the SEC issue an order approving the product. Given that both rely on the underlying price of Bitcoin, Grayscale argues that the market surveillance utilized for authorized Bitcoin futures ETFs is adequate for its spot ETF.
Grayscale’s position was upheld by the appeals court, which found the SEC’s denial to be arbitrary for failing to specify the important distinctions between the two arrangements. Although Grayscale won in court and now needs the SEC to consider its proposal, this does not mean that it will be approved.
James Seyffart, an ETF analyst for Bloomberg, pointed out that although the filing doesn’t seem to make many changes, it does highlight continuing interactions between Grayscale and the SEC, which result in adjustments in response to criticism. Seyffart made it clear that, despite some features being changed—such as a phrase about cash orders—the fund’s ticker is still GBTC, despite early rumors to the contrary.
Regulatory Obstacles: Grayscale’s Path to a Spot Bitcoin ETF
Finance Magnates previously reported on the state of Grayscale’s Spot Bitcoin ETF. It stated that after the success of its Grayscale Bitcoin Trust (GBTC), Grayscale has received a lot of attention from the financial industry regarding the possible launch of the Spot Bitcoin ETF.
Although exposure to Bitcoin is permitted through GBTC, there is a growing need for a Spot Bitcoin ETF that tracks the price of the cryptocurrency directly. The need for a Spot Bitcoin ETF stems from the fact that, although Grayscale was instrumental in bringing digital assets into the mainstream of finance, the present structure of GBTC lacks the transparency and liquidity of a normal ETF.
Investors want a solution that is more straightforward and economical, removing the potential premium or discount to Net Asset Value that GBTC may encounter. But there are regulatory roadblocks, especially from the SEC. The SEC has already rejected a number of Bitcoin ETF proposals due to concerns about fraud, market manipulation, and investor protection.
Although there are signs that the SEC, under Chairman Gary Gensler, is shifting its position, regulatory clearance ultimately depends on investor education, market maturity, continuous regulatory talks, and efficient market surveillance. By addressing issues and improving market integrity, these actions could boost the SEC’s confidence in issuing a Spot Bitcoin ETF.
