Cryptocurrency asset supervisor Grayscale Investments has despatched a letter to the U.S. Securities and Trade Fee (SEC) arguing that new spot Bitcoin ETF filings reminiscent of Blackrock’s, primarily based on prior rulings, shouldn’t be permitted in keeping with precedent.
The letter argues that the regulator should approve any spot bitcoin exchange-traded merchandise (ETPs) in a constant and even-handed method, commenting that together with a surveillance sharing settlement with Coinbase is insufficiently totally different from beforehand rejected filings.
Nevertheless, if the latest ETF filings are permitted, Grayscale requests its rejected software even be permitted concurrently to permit for the dialog of GBTC right into a spot Bitcoin ETF.
Grayscale Bitcoin Belief conversion
Grayscale operates the Grayscale Bitcoin Belief (GBTC), which holds Bitcoin straight in belief. Grayscale initially filed to have GBTC listed for buying and selling on the NYSE Arca alternate however was rejected by the SEC in 2022, a call the agency is now difficult in court docket.
Up to now month, asset managers have submitted a number of different spot Bitcoin ETP filings to the SEC, together with BlackRock, ArkInvest, and VanEck. These new filings point out deliberate surveillance-sharing agreements with crypto alternate Coinbase. Some observers assume such agreements may pave the way in which for SEC approval this time round.
Nevertheless, Grayscale highlighted, the SEC has beforehand indicated that surveillance-sharing with an unregulated buying and selling platform like Coinbase doesn’t alone fulfill the standards for approving a Bitcoin ETP. So if the SEC now reverses course primarily based on the Coinbase agreements, this might signify an inconsistent change in coverage. The letter states,
“However because the Fee is aware of, the opportunity of a surveillance-sharing settlement between a list alternate and a spot bitcoin buying and selling venue shouldn’t be a brand new thought. Certainly, Grayscale mentioned the viability of this strategy with Fee employees in 2019.”
In line with Grayscale’s letter, surveillance-sharing with a regulated Bitcoin futures market such because the Chicago Mercantile Trade (CME) is by itself sufficient to satisfy regulatory necessities for Bitcoin ETPs, in keeping with SEC rulings on Bitcoin futures ETFs. Grayscale cited the under assertion from the SEC.
“CME’s surveillance can fairly be relied upon to seize the results on the CME bitcoin futures market brought on by an individual making an attempt to govern the proposed futures ETP by manipulating the value of CME bitcoin futures contracts… not directly by buying and selling outdoors of the CME bitcoin futures market”
The letter continued to state the above makes clear that “the Fee acknowledges that CME’s surveillance can seize the results of buying and selling on bitcoin spot markets.”
Given this precedent, Grayscale argued that if the SEC is open to contemplating Coinbase agreements as related, it should enable amendments to beforehand rejected filings like GBTC to incorporate comparable agreements as properly.
The SEC ought to then approve all spot Bitcoin ETPs concurrently to keep away from unfair discrimination between issuers, satisfying rules of investor safety, equity and due course of. Particularly, the letter reads,
“Having beforehand rejected the argument {that a} surveillance-sharing settlement with a spot bitcoin buying and selling venue would, in complete or partly, fulfill the Fee’s necessities for approving a spot bitcoin ETP, if the Fee decides to vary course and approve a number of of the above-referenced spot bitcoin ETPs on this foundation, it should achieve this in a good and orderly method—a way that prioritizes the pursuits of traders, specifically the almost a million who at present maintain shares within the Belief.”
In essence, Grayscale contends the SEC should consider spot Bitcoin ETP proposals persistently, with out abruptly altering course to learn newer filings over prior ones.
The letter illustrates how the standing of Bitcoin ETPs within the U.S. stays complicated and contentious, with regulators and trade members decoding coverage cues in very other ways. Nevertheless, it could be seen by some as throwing chilly water on the hearth lit by institutional giants reminiscent of Blackrock’s Larry Fink pushing for higher entry to identify Bitcoin-exposed monetary merchandise.