Grayscale Asks SEC’s Cooperation for Converting Its GBTC to Spot Bitcoin ETF

On Tuesday, September 5, the world’s largest asset manager Grayscale submitted a letter to the U.S. Securities and Exchange Commission (SEC) requesting their cooperation on the way forward to converting its Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF.

Grayscale said that the SEC has no legal reason left to block this conversion, after the recent court ruling. In its recent letter on Tuesday, Grayscale noted:

“Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.”

Besides, Grayscale expressed its belief that the SEC should determine that there are “no valid reasons” for treating GBTC differently from Bitcoin futures ETFs, which have received prior approval from the Commission.

Notably, on August 29, a U.S. Appeals Court issued a ruling against the SEC’s rejection of Grayscale’s request to transform GBTC into a traditional Bitcoin ETF.

Grayscale – US SEC Has No Other Grounds of Rejection

Grayscale emphasized that if there were any additional grounds for denying the conversion, aside from the Exchange Act’s mandate to prevent fraudulent and manipulative actions, those reasons would have already been evident.

“We are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot Bitcoin filings even after Bitcoin futures ETPs began trading,” the asset manager wrote.

Grayscale also pointed out that its fund conversion request has been awaiting approval for nearly three times the duration outlined in the SEC’s regulations. Joseph A. Hall, the author of Grayscale’s previous letter to the SEC in July, which urged the approval of all pending ETF applications simultaneously, concluded the latest letter by stating:

“We believe the Trust’s nearly one million investors deserve a level playing field as quickly as possible.”

Since the August 29 court ruling, the GBTC discount, which indicates how much an ETF is trading above or below its net asset value, has decreased to 19.9%. During the bear market that followed the FTX collapse in December 2022, GBTC’s discount was approaching negative 50%.