Grayscale Challenges SEC, Aims for Bitcoin ETF Approval, Highlighting Market Fairness and Legal Victory as Key Milestones
In a bold move that could pave the way for a major shift in the cryptocurrency landscape, Grayscale, the prominent asset manager, has informed the Securities and Exchange Commission (SEC) that it sees no legitimate grounds to obstruct the transformation of its flagship Bitcoin fund into a spot exchange-traded fund (ETF).
Grayscale’s legal experts dispatched an impactful message to the SEC on 5 September, calling for a meeting to address the aftermath of the recent GBTC conversion challenge in court. This move underscores their commitment to advancing the Bitcoin ETF agenda.
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.
Grayscale’s Fight For GBTC Equality
Grayscale believes that the SEC should logically acknowledge that there are “no grounds” to treat GBTC differently from Bitcoin futures ETFs, which have previously gained the Commission’s approval. This highlights Grayscale’s belief in the necessity of equitable treatment for overall market fairness.
The crucial turning point came on August 29 when a United States Appeals Court ruled decisively against the SEC’s rejection of a bid to metamorphose its GBTC into a spot Bitcoin ETF. In a strongly worded statement, Grayscale underscored that if there were any valid rationale for opposing the conversion aside from the Exchange Act’s mandate to prevent fraudulent and manipulative practices, it would have undoubtedly surfaced by now.
Amplifying urgency, Grayscale noted its fund conversion request has surpassed the SEC’s processing time by almost threefold. Legal expert Joseph A. Hall, who led Grayscale’s July appeal for simultaneous ETF approvals, closed his latest communication with a crucial statistic: post-August 29 court ruling, GBTC’s discount, a measure of trading price versus net asset value, has narrowed to 19.9%.
This remarkable contraction starkly contrasts with the challenging times during the bear market following the December 2022 FTX exchange collapse. GBTC’s discount nosedived dangerously close to the negative 50% mark, highlighting a noteworthy shift in market dynamics.
Grayscale’s resolute stance and the recent court ruling have ignited fresh hope for the cryptocurrency community, hinting at the possibility of a Bitcoin ETF finally gaining regulatory approval, opening new avenues for investors, and reshaping the digital asset landscape. The ball now squarely rests in the SEC’s court as stakeholders eagerly await their next move.