Grayscale in Dialogue with SEC for Bitcoin Trust Conversion into Spot ETF
Summary:
Grayscale executives held discussions with the SEC regarding their flagship Bitcoin trust, which they plan to convert into a spot Bitcoin ETF. A significant agreement was established with BNY Mellon, facilitating share issuance, redemption, and shareholder account management. Despite this progress, the ETF's approval by January 10, 2024, was estimated at a 90% chance. Grayscale is among major asset managers like BlackRock and Fidelity, seeking SEC approval for spot Bitcoin ETFs.
Key figures from the cryptocurrency management firm Grayscale have had discussions with the Securities and Exchange Commission regarding the company’s foremost Bitcoin (BTC) trust. Grayscale seeks to transform this trust into a real Bitcoin exchange-traded fund (ETF). A memorandum from the SEC dated November 20 revealed a meeting between Grayscale CEO Michael Sonnenshein, chief legal officer Craig Salm, ETF leader Dave LaValle and four other top-level staff. They were accompanied by five representatives from the Davis Polk law firm during talks with the SEC’s division for trading and markets. According to the memo, the dialogue covered the plans for a rule change proposal by NYSE Arca, Inc. to list and trade shares of the Grayscale Bitcoin Trust (BTC) following NYSE Arca Rule 8.201-E.
Bloomberg ETF analyst James Seyffart shared a filing outlining Grayscale’s newly established Transfer Agency and Service Agreement with BNY Mellon. As part of the Bitcoin Trust, the bank will regulate the issuance and redemption of shares in addition to managing shareholder accounts. Seyffart stated in a November 21 Twitter post that the final decision on whether to approve or reject form 19b-4s – used to notify the SEC of proposed rule changes – is handled by the trading and markets division at the SEC. He added that the partnership between Grayscale and BNY Mellon was always likely and its establishment does not necessarily mean a conversion of the Bitcoin trust to an ETF is imminent.
In a different Twitter post on November 22, Nate Geraci, the President of ETF Store, stated his belief that the most significant part of the Grayscale and SEC meeting was the term 'uplisting' being used to refer to the conversion of the Bitcoin Trust. He added that this does not suggest any problems with this conversion process. Geraci believes that Grayscale has the potential to become a powerful player in the ETF market if the company can successfully 'uplist' GBTC to NYSE Arca the same day other providers launch their own Bitcoin ETFs and can create a coherent fee strategy.
Geraci further implied that even with competition from giants like BlackRock, Grayscale could enter the markets armed with $20 billion in managed assets. Grayscale formally expressed its intention to list GBTC shares on the NYSE Arca by submitting an S-3 form registration statement to the SEC on October 19. The company’s plans to convert the Bitcoin trust into a real Bitcoin ETF had previously been rejected by the SEC, but a US appellate court mandated the SEC to revisit this decision in October. Grayscale is amongst several other major asset managers including BlackRock and Fidelity, who are also seeking SEC approval for spot Bitcoin ETFs. Seyffart remains of the opinion that there is a 90% chance that an ETF will get approved on or before January 10, 2024.
Published At
11/22/2023 4:10:48 AM
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