Grayscale, a prominent cryptocurrency fund manager, has called for equal treatment in the approval process of all proposed spot Bitcoin exchange-traded funds (ETFs).
Grayscale’s legal team emphasized the need to avoid granting any unfair advantage to specific applicants in a letter submitted to the Securities and Exchange Commission (SEC) on July 27.
In the letter to the SEC, Grayscale’s Chief Legal Officer, Craig Salm, argued against the regulator picking “winners and losers” among the various ETF applicants. Instead, Grayscale urged the SEC to adopt a fair and orderly approach when evaluating and approving these ETFs. They pointed out that the SEC could use its previous approvals of Bitcoin futures ETFs as support for spot ETFs, considering both types of funds are “inextricably linked.”
The letter also discussed the introduction of SSAs between Coinbase and a number of other ETF suppliers, including well-known brands like Invesco, BlackRock, and VanEck. In accordance with these agreements, Coinbase would provide pertinent data and information about its trading books to the SEC in order to keep an eye on any possible market manipulation or erroneous trading activity.
Grayscale raised concerns about these SSAs, stating that they do not align with the SEC’s standards. Since Coinbase is not registered with the SEC as a securities exchange or broker-dealer, Grayscale argued that the SSAs would not satisfy the regulatory guidelines set forth by the SEC.
Potential Impact On Grayscale Bitcoin Trust (GBTC) Investors
Grayscale further expressed concern that approving certain ETF proposals would create an “unfairly discriminatory and prejudicial first-mover advantage” for the selected applicants. This could potentially benefit specific ETFs while disadvantaging others in the market.
Notably, Grayscale’s Bitcoin Trust (GBTC), with nearly one million investors, currently tracks Bitcoin’s price. Salm emphasized that converting GBTC into an ETF would offer substantial value to these investors. Thus, Grayscale believes there is no valid reason for the SEC to prevent GBTC investors from gaining exposure to a spot Bitcoin ETF.
As the SEC continues to evaluate the various spot Bitcoin ETF proposals, the cryptocurrency community awaits their decision, hoping for a fair and equitable approach that will foster a healthy and competitive ETF landscape.