SEC in Talks with Grayscale Over its Spot Bitcoin ETF Bid

The US Securities and Exchange Commission (SEC) is engaging in a discussion with Grayscale Investments regarding the intricacies of the company’s application to transform its trust product, GBTC (Grayscale Bitcoin Trust), into a Spot Bitcoin (BTC) Exchange Traded Fund (ETF).

According to CoinDesk, citing a source familiar with the matter, Grayscale has been actively communicating with the SEC’s Division of Trading and Markets and the Division of Corporation Finance following its successful court battle. 

The Significance of Grayscale’s Move

Notably, this development has drawn attention from the cryptocurrency sector, eagerly anticipating the agency’s decision on Grayscale ETF’s application.

However, the outcome is perceived as a pivotal event that could broaden the accessibility of digital assets for retail investors. Also, the potential approval of such an ETF holds the promise of unlocking new avenues for retail participation in the cryptocurrency market, marking a crucial milestone in the ongoing evolution of the financial landscape.

Furthermore, Grayscale’s pursuit of converting GBTC into a spot bitcoin ETF aligns with the industry’s growing interest in ETFs tied to cryptocurrencies. The regulatory landscape surrounding crypto ETFs has been a focal point of discussion within the financial realm. Grayscale’s engagement with the SEC underscores the importance of regulatory clarity in this domain.

Grayscale Sues SEC For Rejecting ETF Filing

The SEC’s pattern of rejecting spot BTC ETF applications has gone on for a very long while. Oftentimes, the regulator cites the lack of security standards to prevent fraudulent practices.

Grayscale was once a victim of this rejection from the SEC. The digital currency investing and cryptocurrency asset management firm had attempted to convert the GBTC to a full-fledged ETF product but the SEC denied the approval.

Shortly after, Grayscale filed its first appeal with the United States Court of Appeals for the District of Columbia Circuit against the SEC’s rejection decision. After a lengthy legal brawl, Grayscale was granted victory and the SEC was ordered to review the application, an order that possibly fueled current discussions.

Banks Show Interest in Crypto Via Multiple ETF Filings

Within the past months, many accredited traditional investors have indicated inciting interest in the crypto ecosystem, with more of the focus on the leading cryptocurrency by market capitalization, Bitcoin. Many of them have focused their attention on filing for a spot BTC ETF which has never been approved before by the SEC.

So far, about 7 major investment management firms including BlackRock, Fidelity, Invesco, WisdomTree, and Valkyrie have submitted a BTC ETF filing with the SEC. Private brokerage firm Bernstein believes that at this point, there is a fairly high probability that the United States regulator will approve a spot BTC filing.