Just In: SEC Faces Grayscale’s New Bitcoin ETF Ambition

Grayscale Investments is forging ahead with its plans to launch a spot Bitcoin ETF following the SEC’s decision not to contest an August court verdict. This development marks a significant phase in Grayscale’s journey, considering its past legal confrontations with the SEC over similar endeavors. Consequently, the asset manager, known for its crypto-centric portfolio, submitted a fresh application on Thursday, initiating a procedural stride necessary for continuing discussions with another arm of the SEC post-litigation, insider sources revealed.

The legal triumph in August, affirmed by the DC Circuit Court of Appeals, branded the SEC’s prior denial as “arbitrary and capricious,” highlighting the discrepancy in greenlighting bitcoin futures ETFs while obstructing Grayscale’s proposals. The industry now eyes a conclusive mandate expected from the court this week, potentially reshaping the crypto-ETF landscape.

Grayscale Pursues ETF, Files S-3

Amid these anticipations, Grayscale has submitted an S-3 form to the SEC, seeking to register GBTC shares under the Securities Act 1933. Traditionally, ETF aspirants have utilized the S-1 form for equity securities’ initial offerings. However, Grayscale leveraged the S-3 form, simplifying the process due to GBTC’s status as an SEC-reporting entity since January 2020, an update from the company’s recent blog outlined.

The commitment to this path underscores the company’s strategic approach following the Court of Appeals’ decision in August. Industry spectators have since harbored a growing optimism regarding the likelihood of GBTC’s metamorphosis into an ETF.

SEC Reviews Key Grayscale ETF Conversions

For this transformation to materialize, three critical approvals are necessary, Grayscale clarified in its announcement. These include sanctioning NYSE Arca’s 19b-4 filing, securing Regulation M relief, and the SEC’s official declaration of the S-3 form’s effectiveness. While one arm of the SEC appraises the 19b-4 application and Regulation M compliance, another will scrutinize the S-1 and S-3 submissions.

In its communication, Grayscale emphasized its readiness to transition GBTC into an ETF, pending these approvals. The company expressed eagerness to engage with the SEC to expedite the process, ensuring its investors’ interests remain paramount.

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