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.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Do Kwon may miss the start of the March 25 trial in the SEC’s case against the former executive and Terraform Labs

article-image

Riot Platforms bought 31,500 more mining machines while CleanSpark has begun operating in Mississippi

article-image

Dencun was activated on all testnets, a blog post Tuesday said

article-image

Hut 8 also announced it broke ground on a Texas mining site

article-image

Uniswap aims to become a “complete platform for swapping” following its latest product releases

article-image

Continued demand for bitcoin ETFs coupled with greater demand for bitcoin from exchanges is contributing to price moves, analysts say