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.”


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 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

morpho 2 graphic.png

Research

Utilizing a ‘DeFi Mullet’ approach, Coinbase’s Bitcoin-backed loans integration with Morpho demonstrates a powerful blueprint for CEXs to monetize dormant assets by expanding adoption of wrapped products (cbBTC, USDC) while also supporting native and/or preferred DeFi ecosystems (Base) which can further lead to downstream growth in onchain liquidity and increased utilization of the related assets.

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform

article-image

The company’s expanded lineup introduces new ETF products, as more and more issuers get into crypto funds

article-image

President Donald Trump announced a 10% levy on almost all goods and additional tariffs on so-called “worst offending” countries

article-image

Solana may be in “recomposition” mode, as new protocols put usefulness ahead of mere virality

article-image

The stablecoin issuer will have to contend with bigger players and the interest rates environment

article-image

The president reportedly was still working on his tariff policy plans late Tuesday evening