Grayscale urges the SEC to approve all spot Bitcoin ETFs

SEC should approve all applications for spot Bitcoin ETFs. This was stated by Grayscale Investments, which manages digital assets.

The firm’s legal team sent a letter supplementing the eight applications for launching a Bitcoin ETF, ‘to reflect Grayscale’s justification for why the Commission should grant a positive ruling on them’.

[…] The SEC may approve the spot version on the basis of approval of futures Bitcoin ETFs, the notice said.

In the firm’s view, these two types of funds are inextricably linked. Grayscale also added that it intends to support any efforts that enable investors to access cryptocurrencies, and welcomed progress toward greater oversight of the sector.

The SEC should not pick winners and losers; instead, the SEC should continue to provide issuers with feedback or recommendations consistently and impartially.

They added that, in the interests of investors and the market, all spot Bitcoin ETF applications should be approved simultaneously.

In October 2021, Grayscale sent a request to convert GBTC into an exchange-traded fund. On December 17 the agency delayed consideration of the petition to February 2022. On June 30, Grayscale filed a suit against the SEC after a negative response.

The company also suggested that the Commission may have violated the Administrative Procedure Act in approving a futures-based Bitcoin ETF with rejections of applications based on its spot variant.

On June 15, 2023, BlackRock filed with the SEC an application for a spot Bitcoin ETF. Following the financial giant, similar applications arrived from Valkyrie, Fidelity Investments, WisdomTree and Invesco.

It later emerged that the Commission returned the filings because they lacked sufficient information regarding the so-called joint monitoring agreement or details of this mechanism. The latter became a key addition to BlackRock’s application.

Subsequently, the aforementioned firms promptly sent the regulator updated submissions. On July 14, the regulator took up for consideration the applications from BlackRock, VanEck, Invesco, Fidelity Investments and WisdomTree.

A number of experts welcomed the developments. Bernstein analysts argued that the regulator cannot long persist in its negative stance toward spot Bitcoin ETFs.

Circle CEO Jeremy Allaire predicted that a wave of applications for spot Bitcoin ETFs would lead to SEC approval.

However, on July 27, in a Bloomberg interview, the agency’s head Gary Gensler expressed concerns about fraud and manipulation in the industry when asked about Bitcoin ETFs.

There are many mismatches in this area. The platforms themselves on which trading of various tokens occurs, although some fall under securities laws, do not necessarily conform to these time-tested safeguards against fraud and manipulation.

As Grayscale Investments CEO Michael Sonnenshein has said, the participation of large investment firms in the race to launch spot Bitcoin ETFs shows that the first cryptocurrency is no longer a ‘passing fad’.