SEC Discusses Bitcoin Spot ETF Application With Grayscale
Recently, the U.S. Securities and Exchange Commission (SEC) held discussions with Grayscale Investments regarding the proposal to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin Exchange-Traded Fund (ETF).
Detailed in an SEC memo, the meeting involved Grayscale's top executives, including CEO Michael Sonnenshein and CFO Ed McGee, and was focused on the proposed rule change by NYSE Arca, Inc. for listing and trading GBTC shares under its specific guidelines.
Following the directive from the U.S. Court of Appeals in October 2023, the SEC was instructed to reevaluate Grayscale's application for a spot Bitcoin ETF.
The court's order came in response to Grayscale's lawsuit against the SEC, challenging the denial of GBTC's conversion into a Bitcoin ETF. Grayscale contended that the SEC's rejection was inconsistent and unjustified, especially given its prior approvals of similar Bitcoin futures ETF products.
The court unanimously supported Grayscale's viewpoint in August, criticizing the SEC for its lack of a clear rationale in rejecting Grayscale's application while approving others.
Grayscale, in its preparation for becoming an ETF, submitted an S-3 filing to the SEC in October 2023, highlighting its eligibility for this shorter filing process due to its compliance with relevant regulatory requirements in January 2020.
The firm expressed readiness to operate as an ETF, pending necessary regulatory approvals, including NYSE Arca's application, specific exemptions, and the effective declaration of their S-3 form by the SEC.
The plan is to list GBTC on NYSE Arca under the symbol GBTC, with the Bank of New York Mellon acting as the transfer agent.
Despite multiple applications, the SEC has yet to approve any spot Bitcoin ETFs, but the landscape is becoming increasingly competitive, as shown by BlackRock's recent application for a Bitcoin ETF.
A critical window for the SEC to approve pending spot ETF applications recently closed, with expectations now set for a review in the new year.
Market analysts from Bloomberg Intelligence and JP Morgan anticipate the likelihood of the SEC approving a spot Bitcoin ETF by early January.