Grayscale discussed details of a spot Bitcoin ETF with the SEC

November 20, Grayscale management held a meeting with the U.S. Securities and Exchange Commission (SEC) to discuss the process of converting GBTC into a spot bitcoin-ETF. 

According to documents, at the meeting with the SEC’s Division of Trading and Markets were: Grayscale CEO Michael Sonnenshein, chief legal officer Craig Salm, Director of Exchange-Traded Funds Dave LaValle, four other senior executives and five representatives from the law firm Davis Polk.

The discussions concerned “the NYSE Arca rule change proposal for listing and trading GBTC shares under Rule 8.201-E.”

The Bloomberg ETF analyst James Seyffart noted that Grayscale representatives spoke about signing a fund servicing agreement with the bank BNY Mellon. The institution will act as a counterparty to GBTC, facilitating the issuance and redemption of shares. 

Scott pointed out the Transfer Agent agreement with BNY Mellon in $GBTC‘s 8K today because he apparently has eyes everywhere. That said, this agreement is likely something that was always going to be required at some point. Says nothing about timing IMO https://t.co/8eIYNMWzzw

— James Seyffart (@JSeyff) November 21, 2023

«If Grayscale can bring GBTC to NYSE Arca on the same day that other issuers launch spot BTC ETFs, and marshal coordinated efforts to compete on fees, it has a real chance to dominate this category. Even in competition with BlackRock. They will appear on the market on day one with assets under management of $20 billion», — added Geraci.

In June 2022, asset manager filed a lawsuit against the SEC for denying the conversion of its flagship trust. The firm sent the corresponding application in October 2021.

At the end of August 2023, the court granted Grayscale’s motion and ordered the Commission to reconsider the decision. Later the appellate court officially confirmed the verdict.

Since the start of the year, GBTC has risen by 220%. The instrument’s discount to NAV has narrowed to 14.22% amid expectations of an ETF launch. In January the figure stood at 48.31%.

In July, the SEC began reviewing requests to launch spot Bitcoin ETFs from BlackRock, VanEck, Invesco, Fidelity Investments and WisdomTree. Franklin Templeton subsequently joined them.

On August 31, the regulator postponed decision on several applications at least until mid-October. In late September the regulator moved the consideration of filings to January 2024.