On September 5, Grayscale sent a letter to the US Securities Exchange Commission (SEC) urging it to convert Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF as soon as possible. This move comes amid the company's recent court victory in the legal battle against the SEC.
A Bitcoin ETF is a financial instrument that allows participants of traditional markets to invest in Bitcoin through funds. The funds may contain Bitcoin futures (such instruments are already present in the US market), or real spot Bitcoin (this one has not yet been approved by the SEC). If you want to learn more about a Bitcoin ETF, read our article.
The main points of the letter
The letter consists of only 4 pages. Let’s break down the key aspects.
- The difference between futures and spot Bitcoin ETFs. Grayscale argues that the difference is insignificant. Based on the experience with futures-based Bitcoin ETFs, the regulator should approve spot Bitcoin ETFs.
The question of the similarities and differences between these financial instruments is the primary issue in this case. The court’s ruling emphasised that the SEC has not given sufficient reasons to support its claims that these tools are very different. - Prolonged application processing.
Grayscale writes that "filing has now been pending for nearly three times the length allowed by the Commission". - Influence of the delays on investors.
The company mentions that prolonged processings cause losses for trust shareholders affected by the discount. Due to the fact that they cannot use spot Bitcoin ETFs, those investors are forced to choose less convenient and less efficient financial instruments, like GBTC.
What to expect next
Similar to the case with Ripple, the SEC might appeal the court's decision in the Grayscale case. Moreover, the regulator has recently postponed the decision on all applications for spot Bitcoin ETFs until mid-October.
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