Grayscale has submitted an updated filing for its forthcoming spot Bitcoin Exchange-Traded Fund (ETF) to the U.S. Securities and Exchange Commission (SEC) on November 22. The filing is an amendment, a type often utilized by firms that have met reporting requirements.
Grayscale Submits Amended Filing
Grayscale's ETF proposal involves converting an existing investment vehicle. Recent discussions between Grayscale, the SEC, and NYSE Arca indicate ongoing dialogue about the ETF's potential listing. Grayscale's approach has sparked optimism for ETF approval.
Earlier,a three-judge panel of the District of Columbia Court of Appeals ruled that the SEC erred in rejecting Grayscale's proposed Bitcoin ETF without a clear explanation. Following this ruling, Grayscale urged the SEC to review and approve its ETF application.
In a letter, Grayscale's law firm, Davis Polk, emphasized the optimal use of resources and suggested the SEC issue an approving order for the product. Grayscale contends that the market surveillance used for approved Bitcoin futures ETFs is sufficient for its spot ETF, as both rely on Bitcoin's underlying price.
The appeals court supported Grayscale's argument, deeming the SEC's denial arbitrary for not clarifying material differences between the two arrangements. Despite Grayscale's court victory requiring the SEC to review its application, its approval is not guaranteed.
Bloomberg's ETF analyst, James Seyffart, noted that while the filing doesn't appear to introduce significant changes, it underscores ongoing discussions between Grayscale and the SEC, leading to updates in response to feedback. Although some details, like a line related to cash orders, have been modified, Seyffart clarified that the fund's ticker remains GBTC, contrary to initial speculation.
Update: New Grayscale S-3/Prospectus #Bitcoin ETF filing to convert $GBTC. Right off the bat the biggest update is the plan to change $GBTC's ticker to $BTC (which was expected). Skimming through the rest now. pic.twitter.com/W9uNdAHLMv
— James Seyffart (@JSeyff) November 22, 2023
Regulatory Challenges: Grayscale's Spot Bitcoin ETF Journey
In a previous report, Finance Magnateshighlighted the status of Grayscale's Spot Bitcoin ETF. It noted that Grayscale's potential launch of the Spot Bitcoin ETF has generated significant interest within the financial industry, following the success of its Grayscale Bitcoin Trust (GBTC).
While GBTC allows exposure to Bitcoin, there is a growing demand for a Spot Bitcoin ETF that directly tracks the cryptocurrency's price. Despite the dominance of Grayscale in introducing digital assets to mainstream finance, the current structure of GBTC lacks the transparency and liquidity of a typical ETF, prompting the appeal for a Spot Bitcoin ETF.
Investors seek a more direct and cost-effective option, eliminating the premium or discount to Net Asset Value that GBTC can experience. However, regulatory obstacles, particularly from the SEC, pose challenges. The SEC's concerns regarding market manipulation, fraud, and investor protection have historically led to the rejection of various Bitcoin ETF proposals.
While there are indications of a changing stance within the SEC under the Chairman's, Gary Gensler, leadership, the road to approval involves market maturity, ongoing regulatory discussions, effective market surveillance, investor education, and ultimately regulatory approval. These steps aim to enhance market integrity and address concerns, potentially increasing the SEC's confidence in approving a Spot Bitcoin ETF.
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