Craig Salm, Chief Legal Officer at Grayscale, notes that as we all await a decision from the DC Circuit in their lawsuit to convert GBTC to a spot bitcoin ETF, the firm’s legal team at Davis Polk submitted a comment letter “to GBTC’s pending 19b-4 filing, as well as seven other spot bitcoin ETF filings with newly-proposed surveillance sharing agreements (SSAs).”
The comment letter was “submitted to capture Grayscale’s rationale for why the SEC should approve all spot bitcoin ETF applications. ”
As noted in a blog post:
“We remain encouraged by the increased momentum around spot bitcoin ETF filings. Not only does this underscore the continued maturation of the bitcoin spot market, but it also reinforces our long-held belief that American investors should have access to spot bitcoin ETFs in the US.”
According to the Grayscale team, there are a few key points in the comment letter worth highlighting:
First, as they’ve articulated in their lawsuit, the SEC is already in “a position to approve spot bitcoin ETFs based on its previous approval of bitcoin futures ETFs.”
The firm pointed out that Bitcoin’s spot and futures markets “are inextricably linked (as evidenced by third-party studies showing 99% correlation).”
Grayscale explained that this “means surveillance of the CME bitcoin futures market – a CFTC-regulated market of significant size and member of the Intermarket Surveillance Group, a global network of exchanges that share market surveillance – should sufficiently serve to protect against potential fraud or manipulation in the underlying spot bitcoin market.”
To be clear: although they do not believe the introduction of an SSA with a spot bitcoin market is or should be the “silver bullet” to getting spot bitcoin ETFs approved in the US, as an organization “with a deep history of embracing US financial rules and regulations, Grayscale continues to support any effort that enables investors to access the crypto ecosystem, and they applaud all progress that brings more oversight to centralized crypto markets.”
They will also “take any action necessary to convert GBTC to an ETF.”
Moreover, the SEC’s actions “related to bitcoin ETFs should be made in a fair and orderly manner.” As a disclosure-based regulator, the SEC should “not pick winners and losers; instead, the SEC should continue to provide issuers with feedback or guidance consistently and equitably.”
The firm added:
“Whether the SEC ultimately approves a spot bitcoin ETF following a Court mandate or through an evolution in its position on the matter, they should do so in a way that’s fair for all investors and issuers. At Grayscale, we believe that for the benefit of Bitcoin, the market, and investors, all spot bitcoin ETF applications should be approved simultaneously.”
They also mentioned:
“Ultimately, this is about ensuring American investors are protected and have access to their choice of bitcoin investment vehicle. There are nearly one million investors across all 50 states who own GBTC, and GBTC’s conversion to an ETF would return billions of dollars in value to these investors. When the SEC is ready to approve spot bitcoin ETF applications, there is simply no reason to keep GBTC investors from the spot bitcoin ETF they deserve. We will continue to advocate for this cause on behalf of our investors.”
The comment later is available here.
