Grayscale Lawyers Again Urge SEC to Approve GBTC Conversion to Bitcoin ETF

BitGo president is among the latest crypto executives asking the agency to greenlight the vehicle

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • Attorneys cite SEC’s Teucrium bitcoin futures ETF approval in latest letter to regulator
  • The bitcoin ETF landscape is “unfair and discriminatory” against GBTC shareholders, Grayscale chief legal officer says

Lawyers representing crypto investor firm Grayscale Investments have updated their letter to the SEC a few weeks after the agency’s decision to approve a bitcoin futures ETF.

Attorneys for Davis Polk & Wardwell LLP previously argued to the SEC that the regulator’s decision to approve a futures-based fund and not a spot ETF is “arbitrary and capricious” — and therefore in violation of the Administrative Procedure Act (APA).

Grayscale is trying to convert its Bitcoin Trust (GBTC) to an ETF, and the SEC’s decision on that proposal is expected in July. 

Following its approval of several bitcoin futures ETFs in October, the watchdog greenlighted another such fund filed by fund group Teucrium. Unlike the others, which were filed under the Investment Company Act of 1940, the Teucrium vehicle was filed under the Securities Act of 1933 — the very regulation under which spot bitcoin ETFs are filed.

The Grayscale lawyers argued in their latest letter that the Teucrium decision confirms that 1940 Act registration is not a basis for the Commission to approve one product and reject another. 

“The commission’s prior disapprovals of spot bitcoin ETPs have not identified any distinct and significant additional risk of fraud and manipulation that is somehow specific to spot bitcoin ETPs, and none exists,” the attorneys wrote.

GBTC, which launched in 2013, has $25.3 billion in assets. The trust has consistently traded at a discount, and more than 3,000 letters have been submitted to the SEC advocating for its conversion.

“As it stands, the Bitcoin ETF landscape is unfair and discriminatory against GBTC shareholders and all of the other US investors looking for an accessible and efficient way to gain their Bitcoin exposure,” Grayscale Chief Legal Officer Craig Salm wrote in a Monday blog post. “We look forward to engaging further with the SEC on this matter.”

Cassandra Lentchner, president of institutional crypto platform BitGo, was among the latest to write the SEC in support of GBTC’s proposed conversion. Paul Grewal, Coinbase’s chief legal officer, made arguments in a December dispatch.

Lentchner called the regulator’s concerns around manipulation “misplaced,” noting bitcoin’s market capitalization of $750 billion and trading volumes of tens of billions daily.

“An ETF with redemption capacity would be able to more closely track current prices,” Lentchner wrote. “There is no basis to permit an investment in a future contract but not the asset itself.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Also in the tokenized fund space, Franklin Templeton launches on Base and Securitize hits $1 billion in tokenized RWA onchain

article-image

It turns out that bitcoin never actually hit an all-time high in March. Thanks a lot, inflation.

article-image

Spire, Citrea and Nillion also announced raises this week

article-image

The latest recipient of an SEC Wells notice is a Web3 gaming company

article-image

Thursday’s selloff was led by tech stocks, triggered by disappointing outlooks from giants Meta and Microsoft

article-image

Historically, positive returns have been a bit more of a toss-up during the year’s 11th month