Grayscale Makes Renewed Attempts To Turn Its GBTC Into An ETF
Even though the SEC has yet to decide on Grayscale’s proposal, the asset management firm has already hinted that it might sue the financial regulator if it fails to approve its proposal. While the general crypto market conditions indicate that the SEC might be unwilling to approve Grayscale’s proposal, the firm continues to clamor for it.
Grayscale Holds Private Meetings With The SEC
A CNBC report claimed that “grayscale executives held a private meeting with the SEC this past week over their proposal.” Grayscale opines that “its GBTC holds approximately 3.45% of the BTC worldwide, with nearly 855,000 account holders. Also, the GBTC has been trading at about 25% discount of BTC price.”
The company further stated that once the SEC approves its GBTC to be turned into an ETF, its holders’ BTC value will be worth nearly $8B. When you consider that the SEC has rejected several BTC ETF proposals, including the recent ones by VanEck and BlockFi, it seems unlikely that the SEC would approve Grayscale’s proposal.
Grayscale has been applying for BTC ETF approval with the SEC for the past five years before recently sending this new application where it proposed to turn its popular GBTC investment into a BTC ETF. Nevertheless, the SEC has fixed July 6, 2022, as the date it would make a final decision on whether to approve or deny Grayscale’s proposal.
Why Is Grayscale Determined To Turn Its GBTC Into A Spot BTC ETF?
Grayscale opines that converting its GBTC into a spot BTC ETF would make investing in BTC available to any investor regardless of their experience with crypto so long they are conversant with stock trading. The firm provided a 24-page document about it, presented to the SEC. These illustrations are also shown in the CNBC report, albeit with low resolution.
Grayscale argued that it doesn’t understand the SEC’s insistence on not approving a spot BTC ETF, given that it had no issues approving a BTC futures ETF. It further argued that both a spot BTC ETF and a BTC futures ETF carry similar risk levels since both track BTC closely and would always be affected by the price volatility of the leading digital asset.
Last month, in an interview, Grayscale CEO, Michael Sonnenshein, hinted at a legal resolution while speaking on the issue. Sonnenshein stated that “if the SEC can’t use the same basis to analyze futures ETF and spot ETF, it is a possible violation of the administrative procedure act.”
Besides issuing a legal threat and holding private meetings with the SEC, Grayscale is also soliciting and coordinating the public to send letters to the SEC to ensure that its GBTC is converted to a spot BTC ETF. So far, these public letters written to the SEC are now over 3,200.
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