Grayscale Had ‘Productive’ Meeting With SEC on Bitcoin ETF Conversion

The SEC to date has approved several futures-based bitcoin ETF products, but has delayed or outright rejected all spot bitcoin ETF applications.

AccessTimeIconMay 11, 2022 at 8:03 p.m. UTC
Updated May 11, 2022 at 8:24 p.m. UTC

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Grayscale Investments LLC recently met with the Securities and Exchange Commission (SEC) to better make its case for turning the Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF).

“Following a productive meeting, we remain encouraged by our ongoing engagement with the SEC,” a Grayscale spokesperson told CoinDesk. “At Grayscale, we intend to maintain an open dialogue with regulators and policymakers as we look ahead to July 6.”

Grayscale’s parent company Digital Currency Group is also the owner of CoinDesk, which is run as an independent subsidiary.

Grayscale in October 2021 initially applied to convert its Grayscale Bitcoin Trust into a spot ETF. The SEC has since pushed off a decision, but currently plans to render a verdict by July 6.

In a presentation made to the SEC at the recent meeting, Grayscale said converting its marquee product into an ETF would “protect investors and the public interest, allowing the product to better track net asset value while giving investors the freedom to invest in Bitcoin in a safe and secure manner.”

Additionally, said Grayscale, an ETF vehicle instead of the current trust structure would “allow better NAV tracking, reduce discounts and premiums, and unlock approximately $8B for investors.”

The Grayscale Bitcoin Trust – currently with about $20 billion in assets under management – has been known to trade at wide premiums/discounts to net asset value, and currently sells for a 27% discount to NAV.

Giving some hope to spot bitcoin ETF fans, the SEC in April approved a futures-based fund from Teucrium. What made this approval different than other futures-based ETFs was that its application was under the “33 Act” and "34 Act" (the Securities Acts of 1933 and 1934). The previous bitcoin (BTC) ETF approvals had been under the “40 Act” (the Investment Company Act of 1940).

Providing context, Grayscale Chief Legal Officer Craig Salm told CoinDesk last month that the Teucrium advancement showed the SEC as comfortable not just with ETFs regulated under the 40 Act, but also the 33 and 34 Acts, which is what spot bitcoin ETFs would be regulated under.

Additionally, asset manager Bitwise has a spot bitcoin ETF application pending review with the SEC, with a final deadline of June 29. While declining to address the fund’s specific chances of being approved, Matt Hougan, Bitwise’s chief investment officer, in April told CoinDesk “we’re making progress."

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Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

CoinDesk - Unknown

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.