After a favorable court ruling, Grayscale seeks collaboration with the SEC.
Asset management firm Grayscale has formally contacted the US Securities and Exchange Commission (SEC), seeking a dialogue about converting its flagship Bitcoin Trust into a spot exchange-traded fund (ETF).
On September 5th, Grayscale's legal team sent a letter to the SEC requesting a meeting to discuss the next steps.
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The request came a week after a US Appeals Court ruled against the SEC’s refusal to approve the transformation of the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
In the letter, Grayscale argued that any legal ground the SEC may have previously had for blocking the conversion has now evaporated.
When addressing the US securities regulator, Grayscale stated:
Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.
Joseph A. Hall, the author of the letter and also the individual who wrote Grayscale’s earlier plea to the SEC in July, added:
We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible.
Grayscale further noted that their application for converting GBTC has been pending much longer than the SEC's rules generally allow. The firm expressed its confidence that any valid reason to reject the application, other than what is required by the Exchange Act to prevent fraud and manipulation, would have already emerged.
Interestingly, since the Appeals Court ruling on August 29th, the GBTC discount has dropped significantly to 19.9%. Prior to this, during the market low that followed the FTX collapse in November 2022, the discount had reached almost negative 50%.
Grayscale's nudge to the SEC, catalyzed by a recent court ruling, could be a significant step toward the conversion of GBTC into a Bitcoin ETF. While the SEC has yet to respond, the ongoing developments could potentially impact Grayscale’s nearly one million investors and the broader cryptocurrency market.
