Media reports say Grayscale and SEC in talks over GBTC conversion

The U.S. Securities and Exchange Commission (SEC) has begun talks with Grayscale Investments regarding the details of converting GBTC into a spot Bitcoin-ETF. CoinDesk reports this, citing a source familiar with the matter. 

The company is engaging with two regulator divisions — the Division of Trading and Markets and the Division of Corporate Finance. They will play a role in drafting and approving the firm’s documents for the exchange-traded fund. 

In June, the asset manager f​iled a lawsuit against the SEC for denying the conversion of its flagship trust. The firm submitted the corresponding petition in October 2021. 

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

“We are simply focused on a constructive restart of our engagement with the Division of Trading and Markets. There is still more to be done,” said Grayscale’s chief legal officer Craig Salm, without going into detail.

According to the company’s plans, the spot GBTC will be listed on the NYSE Arca exchange. After the S-3 form and the separate 19b-4 filing are approved, the firm will begin issuing the product on a permanent basis. 

Since the beginning of the year, GBTC has risen by 220%. The instrument’s discount to NAV 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 later joined them.

On 31 August the regulator delayed decisions on several applications at least until mid-October. By the end of September the regulator pushed back consideration of the filings to January 2024.