Bitcoin

Unlocking the Future: Grayscale Engages SEC in Groundbreaking Talks on Spot Bitcoin ETF Specifications

Grayscale Executives Meet SEC to Discuss Bitcoin Trust Conversion to ETF

Executives from leading crypto asset manager Grayscale recently met with the Securities and Exchange Commission (SEC) to discuss the potential conversion of its flagship Bitcoin trust into a spot Bitcoin exchange-traded fund (ETF). The details of the meeting were disclosed in a Nov. 20 SEC memo.

The meeting included Grayscale CEO Michael Sonnenshein, legal chief Craig Salm, ETF head Dave LaValle, and four other executives, alongside representatives from the Davis Polk law firm. The discussions focused on NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E.

In a filing shared by Bloomberg ETF analyst James Seyffart, Grayscale revealed that it had entered a Transfer Agency and Service Agreement with BNY Mellon. The bank will act as the agent for its Grayscale Bitcoin Trust (GBTC), facilitating the issuance and redemption of shares and maintaining shareholder accounts.

While the agreement with BNY Mellon is seen as a necessary step, it does not indicate an imminent conversion of GBTC to an ETF. Seyffart noted that the SEC’s trading and markets division is responsible for approving or denying proposed rule changes, and the agreement with BNY Mellon was likely always going to be required at some point.

The President of ETF Store, Nate Geraci, stated in a Nov. 22 tweet that the most significant aspect of Grayscale’s SEC meeting is that GBTC conversion is being referred to as an “uplisting.” He emphasized that this does not imply any issues with conversion to an ETF.

Geraci believes that Grayscale has a real chance of dominating the ETF category if it can successfully uplist GBTC to NYSE Arca on the same day other issuers launch spot Bitcoin ETFs. He also mentioned that Grayscale is expected to enter the markets with $20 billion in assets under management, even with the involvement of major asset manager BlackRock.

Grayscale submitted a registration statement with the SEC on Oct. 19, expressing its intention to list the shares of GBTC on the NYSE Arca under the ticker symbol GBTC. The SEC was mandated by a U.S. appellate court in October to review its decision to deny Grayscale’s bid to convert GBTC to a spot ETF.

Grayscale is not alone in seeking SEC approval for spot Bitcoin ETFs. Other major asset managers, including BlackRock and Fidelity, are also pursuing this opportunity.

Seyffart remains optimistic about the approval of a Bitcoin ETF, stating that things are continuing to move forward. He maintains a 90% likelihood of approval on or before Jan. 10, 2024.

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