- The SEC has started discussions with Grayscale about converting Grayscale’s Bitcoin Trust (GBTC) into a spot bitcoin ETF, following a court ruling that the SEC must re-review Grayscale’s proposal.
- In August 2022, a court ruled the SEC must re-consider rejecting Grayscale’s application to convert GBTC into a spot bitcoin ETF, stating the SEC treated spot bitcoin ETFs differently than approved futures-based bitcoin ETFs.
- Grayscale has been in contact with two SEC divisions after the ruling – the Division of Trading and Markets and the Division of Corporation Finance. The outcome remains uncertain, but the ruling puts pressure on the SEC to potentially approve a spot bitcoin ETF.
The Securities and Exchange Commission (SEC) has reportedly started discussions with Grayscale Investments regarding the asset management firm’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF). This comes after a recent court ruling stating that the SEC must re-review Grayscale’s spot bitcoin ETF proposal.
Background on Grayscale’s Spot Bitcoin ETF Bid
In August 2022, a US appeals court ruled that the SEC must re-consider its rejection of Grayscale’s application to convert GBTC into a spot bitcoin ETF. The court stated that the SEC had treated spot bitcoin ETF applications differently compared to futures-based bitcoin ETFs, which have been approved.
Following the ruling, Grayscale submitted a new filing for a spot bitcoin ETF conversion ahead of the court’s formal order to re-review the proposal.
Details on the SEC’s Talks with Grayscale
According to a recent report, Grayscale has been in contact with two SEC divisions after the court ruling:
- The Division of Trading and Markets
- The Division of Corporation Finance
SEC Chair Gary Gensler has said the agency is still reviewing the court’s decision. He also explained the SEC’s standard process for evaluating ETF filings, which involves feedback from the Division of Corporation Finance and review by the Division of Trading and Markets.
Multiple asset managers, including BlackRock and Fidelity, have applied for spot bitcoin ETFs. Some experts believe the Grayscale court ruling could pave the way for approval of these proposals.
Conclusion
The SEC opening talks with Grayscale on potentially converting GBTC into a spot bitcoin ETF is a significant development for the crypto industry. While the outcome remains uncertain, the court mandate for the SEC to re-assess its rejection puts renewed pressure on the agency to approve a spot bitcoin ETF. The next few months will be pivotal in determining if such an ETF finally becomes a reality.
