Grayscale had 'productive' meeting with SEC over bitcoin ETF conversion

Grayscale had 'productive' meeting with SEC over bitcoin ETF conversion

The SEC has approved several futures-based bitcoin ETF products to date, but has delayed or outright rejected all applications for bitcoin spot ETFs.

Grayscale Investments LLC recently met with the Securities and Exchange Commission (SEC) to better make its case for converting Grayscale Bitcoin Trust (GBTC) into a bitcoin spot ETF.

"After a productive meeting, we continue to be encouraged by our ongoing collaboration with the SEC," a Grayscale spokesperson told CoinDesk. "At Grayscale, we intend to maintain an open dialogue with regulators and policymakers as we look ahead to July 6."

Grayscale initially filed to convert its Grayscale Bitcoin Trust into a spot ETF in October 2021. The SEC has since delayed a decision, but currently plans to issue a ruling by July 6.

In a presentation made to the SEC at its recent meeting, Grayscale said converting its branded product into an ETF "would protect investors and the public interest by allowing the product to better track net asset value and giving investors the freedom to invest in bitcoin in a safe manner."

In addition, Grayscale said, an ETF vehicle in place of the current trust structure "would provide better tracking of net asset value, reduce discounts and premiums, and free up approximately $8 billion for investors."

The Grayscale Bitcoin Trust - which currently has about $20 billion in assets under management - is known to trade at large premiums and discounts to net asset value, and is currently selling at a 27% discount to NAV.

Grayscale's parent company, Digital Currency Group, also owns CoinDesk, which is run as an independent subsidiary.

The SEC approved a futures-based fund from Teucrium in April, giving bitcoin ETF fans some hope. This approval differed from other futures-based ETFs in that the application was made under the "33 Act" and the "34 Act" (the securities laws of 1933 and 1934). Prior Bitcoin ETF approvals fell under the "40 Act" (the Investment Company Act of 1940).

Grayscale Chief Legal Officer Craig Salm told CoinDesk last month that the Teucrium push shows that the SEC is not only comfortable with ETFs being regulated under the 40 Act, but also under the 33 and 34 Acts, under which Bitcoin ETFs would be regulated.

In addition, asset manager Bitwise has filed an application for a bitcoin ETF with the SEC, which must be reviewed by June 29. Matt Hougan, Bitwise's chief investment officer, declined to comment on the fund's specific chances of approval, but told CoinDesk in April: "We're making progress."