Grayscale makes another effort to push the SEC to approve its conversion of GBTC to Bitcoin ETF

This article comes fromFT, original author: Stefania Palma

Odaily Translator | Nian Yin Si Tang

Odaily Translator | Nian Yin Si Tang

Grayscale is trying again to win approval from the US securities regulator, the SEC, to turn the world's largest crypto investment vehicle into a fund traded on major Wall Street exchanges.

The asset manager is focusing on a legal detail to support its application to the U.S. Securities and Exchange Commission (SEC) to convert its $40 billion bitcoin trust GBTC into exchange trading, according to a letter sent to the regulator. fund.

Grayscale’s letter comes as the SEC considers whether to allow U.S. exchange-traded funds to hold bitcoin for the first time, rather than derivatives related to the cryptocurrency. The regulator said it would make a decision on Grayscale's application by early July at the latest.

Prior to this, several of Grayscale’s competitors had “faltered” in the process of trying to launch similar funds. To a certain extent, it can be said that Grayscale’s application represents the last hope of the encryption industry to launch such products in the near future. one. Only three other similar crypto ETFs are currently awaiting approval.

The U.S. SEC has consistently rejected applications for so-called spot crypto ETFs over concerns that the cryptocurrencies are traded on unregulated platforms where monitoring is difficult and manipulation has been a problem. The SEC has approved ETFs to hold crypto futures, but those products must be traded on platforms regulated by U.S. financial regulators.The U.S. SEC issued a regulatory rule for bitcoin spot ETFs earlier this month.approve

Grayscale is betting that the event could be used to facilitate approval of its own application.

In a letter filed with the SEC this week, Grayscale said: “We believe that Teucrium’s directive confirms a fundamental point … in approving (exchange-traded products) the distinction between bitcoin spot products and bitcoin futures. The product is unfounded."

Craig Salm, Grayscale’s chief legal officer, added that after Teucrium’s approval, the SEC “effectively lost the ability to use the distinction between futures ETFs and spot ETFs as a reason to reject funds tied to physical bitcoin.”

The SEC declined to comment.

Some compliance professionals remain skeptical that Grayscale's new legal strategy will work.

SEC chief Gary Gensler believes that the "basically unregulated" bitcoin market has raised concerns about fraud and manipulation. He also called on crypto platforms to register with the SEC, saying that most tokens are securities and fall within the SEC's purview.

SEC approval for spot bitcoin ETFs will remain difficult until matters including fund pricing, valuation, custody and liquidity are standardized and more transparent, said Amy Lynch, founder and president of regulatory consulting firm FrontLine Compliance.

"Gensler would have to change his position at this point," Lynch added. "I don't think he'll do that unless these filings answer all the questions. I think that's very unlikely."

But those in the crypto space believe that the evolution of the bitcoin market in recent years should ease those concerns.

“The market itself has gotten stronger since the rejection of the first (spot crypto) ETFs in 2017.” Salm added that crypto exchanges have stepped up protections through increased trading oversight and the use of technology similar to the National Stock Exchange .Matt Hougan, chief investment officer at Bitwise Asset Management, said that while the maturation of the regulated CME spot bitcoin market is the "most important factor," the broader market is becoming more and more popular due to the launch of regulated ETFs overseas and the addition of more institutional players. The crypto ecosystem has been improved. In October last year, Bitwise Asset Management has submitted to the US SECsubmit

Application documents for Bitwise Bitcoin ETP Trust, a product that directly holds Bitcoin.

Dechert partner Timothy Spangler said it was unclear what additional information the SEC would need when other regulators, such as Australia and Canada, approve spot bitcoin ETFs.

Those countries “appear to accept” the concept of bitcoin as an asset mature enough to be included in a publicly traded instrument, he said.