Grayscale Investments recently engaged in talks with officials from the SEC concerning its plan to transform the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) focused on spot Bitcoin. The discussion involved prominent individuals from Grayscale, including CEO Michael Sonnenshein and CFO Ed McGee, alongside representatives from the SEC’s Division of Trading and Markets.
The discussions centered around “NYSE Arca, Inc.’s proposed rule modification for the listing and trading of shares from the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E,” as outlined in a memorandum from the SEC. Grayscale’s efforts to establish a spot Bitcoin ETF have encountered regulatory examination, resulting in legal proceedings and a court directive in October 2023 for the SEC to reassess the application.
Earlier this year, the U.S. Court of Appeals ruled in favor of Grayscale, stating that the SEC had not provided a coherent explanation for rejecting the conversion of GBTC into a Bitcoin ETF while approving similar Bitcoin futures ETF products. Grayscale subsequently submitted an S-3 filing with the SEC in October 2023, expressing readiness to operate as an ETF upon securing necessary regulatory approvals.
In its filing, Grayscale outlined its eligibility for the shorter S-3 form due to GBTC’s registration under the Securities Exchange Act of 1934 since January 2020. The asset manager emphasized its commitment to meeting regulatory requirements, including NYSE Arca’s 19b-4 application, Regulation M relief, and the effective declaration of the S-3 form by the SEC.
While the SEC has rejected previous spot Bitcoin ETF applications, industry analysts from Bloomberg Intelligence and JP Morgan estimate a potential approval by early January. Grayscale’s engagement with the SEC signifies ongoing efforts to navigate the regulatory landscape and achieve a breakthrough in introducing a spot Bitcoin ETF.
