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$30,000,000,000,000 Floodgates Will Open for Bitcoin Upon Approval of Spot BTC ETFs: Grayscale CEO

December 20, 2023 The Daily Hodl

Crypto exchange FTX gets nod to sell $873M of assets to repay creditors

November 30, 2023 Coin Telegraph

Crypto exchange FTX gets nod to sell 3M of assets to repay creditors

Bitwise

Nearly $700 million of the $873 million trust assets allowed to be sold by FTX comes from Grayscale’s flagship product, the Grayscale Bitcoin Trust, or GBTC.

Bankrupt crypto exchange FTX has been given the green light to sell around $873 million of trust assets, with proceeds used to repay creditors impacted by the exchange’s collapse in 2022, according to a Nov. 29 filing in a Delaware bankruptcy court.

The $873 million in assets will be sourced from FTX’s stakes in various trusts issued by crypto asset manager Grayscale Investments, valued at $807 million, and custody service provider Bitwise — valued at $66 million.

While the court document references a total of $744 million in assets — this is due to the valuation figure being as of Oct. 25, 2023. The assets have increased in value since.

*Order authorizing FTX Trading to sell trust assets. Source: Kroll*

The approval comes nearly four weeks after FTX debtors filed a motion to Judge John Dorsey on Nov. 3 requesting the sale of the six cryptocurrency trusts — including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund (BITW).

FTX currently owns over 22 million units of GBTC, Grayscale’s flagship Bitcoin product, now worth $691 million, while its 6.3 million shares of ETHE are now worth around $106 million.

Grayscale’s Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN) and Digital Large Cap Trust (GDLC) are the three other trusts that FTX can now sell to recoup funds for impacted FTX customers.

*FTX's shares in Grayscale and Bitwise were worth $744 million as of Oct. 25, but the valued has increased since. Source: Kroll*

FTX’s administrators, headed by John. J Ray III, has been working to recover assets since Sam Bankman-Fried’s former empire collapsed in November 2022.

So far, around $7 billion in assets has been recovered, with nearly half of that coming in the form of cryptocurrencies ($3.4 billion).

In June, FTX’s debtors estimated the total amount of customer assets misappropriated was $8.7 billion.

Meanwhile, Bankman-Fried was convicted on seven fraud-related charges on Nov. 2 and is set to be sentenced on March 28.

He remains in Brooklyn’s Metropolitan Detention Center for the time being, where he recently paid four mackerels in exchange for a haircut.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Grayscale Bitcoin Trust Discount Narrows As Court Gears Up To Issue GBTC Mandate: Report

October 17, 2023 The Daily Hodl

SEC reportedly wont appeal court decision on Grayscale Bitcoin ETF

October 14, 2023 Coin Telegraph

Coin Telegraph

If true, the SEC will need to review and make a decision on Grayscale's spot Bitcoin ETF application. If denied, Grayscale could appeal the decision.

The U.S. Securities and Exchange Commission reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to review the firm’s spot Bitcoin (BTC) exchange-traded fund application.

Benzinga (and others) reporting that Reuters is reporting that the SEC will NOT be appealing Grayscale case. pic.twitter.com/yd9BBtRwv5
— Eric Balchunas (@EricBalchunas) October 13, 2023

The SEC’s supposed decision not to appeal the D.C. Circuit Court of Appeal’s ruling was highlighted in an Oct. 13 report from Reuters, which cited “a source familiar with the matter.”

Bloomberg analysts also expect the SEC not to appeal to the Supreme Court but emphasized that this doesn’t necessarily mean Grayscale’s application is set to be approved.

If the reports are true, the SEC will need to follow the court’s August order and review Grayscale’s application to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

According to Reuters, the appeals court is expected to issue a mandate specifically outlining how its ruling should be “executed” by the SEC.

Commenting on the developments, Bloomberg ETF analyst James Seyffart noted via X that:

“I do not think they will appeal to the Supreme Court either. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after?”

1. Done deal I guess if this is accurate. No en banc application

2. No. I do not think they will appeal to the Supreme Court either.

3. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after? https://t.co/2EayzqeKGq
— James Seyffart (@JSeyff) October 13, 2023

Moving forward, Seyffart suggested that it is likely that “we will find out in the next week (or two)” what the deadline is for the SEC to approve or deny Grayscale’s spot BTC ETF application.

If the SEC were to deny the application, Grayscale could then appeal that decision, dragging the process out even longer.

As it stands, around seven spot Bitcoin ETF applications have been put before the SEC that are awaiting a decision from the regulator.

In a separate preceding X post on Oct. 13, Seyffart reiterated his view that there is a 90% chance that a spot Bitcoin ETF application will get approved in January 2024, specifically the application from Cathie Wood’s ARK Invest.

I've gotten a lot of questions regarding my current view on Spot #Bitcoin ETFs over the last couple weeks. This is the first section of the note I put out yesterday with @EricBalchunas.

TLDR: Our view hasn't changed much https://t.co/dRAm5IsdQf pic.twitter.com/Htsi3n2XxV
— James Seyffart (@JSeyff) October 13, 2023

Seyffart and Bloomberg’s senior ETF analyst Eric Balchunas, also previously suggested that there is a 75% chance that an application will get approved in 2023.

Magazine: Hall of Flame: Crypto lawyer Irina Heaver on death threats, lawsuit predictions

Bitcoin ETFs have 75% chance of approval this year: Bloomberg analysts

August 31, 2023 Coin Telegraph

Bitwise

Bloomberg ETF analysts raised their odds for a spot Bitcoin ETF approval after the recent Grayscale victory against the SEC.

Bloomberg analysts have raised the probability for an approved spot Bitcoin exchange-traded fund (ETF) by the end of 2023, following a recent Grayscale victory against the federal securities regulator.

In a Aug. 30 post on X (Twitter), Bloomberg senior ETF analyst Eric Balchunas said they have raised the chances to 75% from an earlier 65% — due to the unanimity and decisiveness at which the United States Court of Appeals Circuit reached its decision in the recent case.

“The judges unanimously repudiated the SEC’s arguments, and the agency will struggle to justify further denials as it faces deadlines,” Bloomberg analysts James Seyffart and Elliot Stein added in a separate Aug. 30 note.

NEW: @JSeyff & I are upping our odds to 75% of spot bitcoin ETFs launching this yr (95% by end of '24). While we factored Grayscale win into our prev 65% odds, the unanimity & decisiveness of ruling was beyond expectations and leaves SEC w "very little wiggle room" via @NYCStein pic.twitter.com/IyEGmWjuHa
— Eric Balchunas (@EricBalchunas) August 30, 2023

In his own post on X, Seyffart added that spot Bitcoin ETF approvals will likely be a “done deal” by Q4 2024, estimating the approval odds to have now skyrocketed to 95% by then.

Balchunas added that given the recent legal and public relations loss, a denial by the SEC will be “politically untennable.”

Beyond the legal loss, there is also the PR loss (which matters bc it sets narratives, changes minds). And this got covered far and wide in mainstream media incl NYT, WSJ, CNN, AP, ABC & on and on. We think the legal and PR loss will combine to make denial politically untenable. pic.twitter.com/Uarh5CszXC
— Eric Balchunas (@EricBalchunas) August 30, 2023

Over the next five days, seven Bitcoin spot ETF applications are due for a “first deadline” decision by the SEC, including Bitwise, BlackRock, VanEck, Fidelity, Invesco, Wisdomtree and Valkyrie.

Balchunas said he “wouldn’t be surprised” if the SEC delays these upcoming Bitcoin spot ETF applications.

But the most likely outcome will be that we unexpectedly wake up to the SEC giving in and approving the Bitcoin spot ETFs in one hit, he said.

Magazine: Hall of Flame: Wolf Of All Streets worries about a world where Bitcoin hits $1M

SEC’s first deadlines to approve 7 Bitcoin ETFs coming over the next week

August 30, 2023 Coin Telegraph

Appeal

Analysts say the best-case scenario is the SEC approves the batch of spot Bitcoin ETFs but it may also exercise its right to an appeal.

The United States Securities and Exchange Commission is facing its first deadlines to decide on seven new Bitcoin (BTC) spot exchange-traded fund applications with the latest being Sept. 4 amid its defeat to Grayscale Investments in a U.S. federal appeals court.

Investment firm Bitwise will learn if its ETF will win the SEC’s approval on Sept. 1 while BlackRock, VanEck, Fidelity, Invesco and Wisdomtree will all be awaiting the SEC’s decision for their funds by Sept. 2, according to several SEC filings.

Meanwhile, Valkyrie is set to hear back from the SEC on Sept. 4.

*List of recent Bitcoin spot ETF applicant filing dates and deadlines. Source: Bloomberg*

The U.S. Court of Appeals ruled on Aug. 29 that the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was “arbitrary and capricious” — but it doesn’t mean the SEC must approve Grayscale’s application or others in the future, says Bloomberg ETF analyst James Seyffart.

In an Aug. 29 Bloomberg interview, Seyffart explained Grayscale’s win “definitely” increases the odds of a successful outcome for the next wave of applicants.

He isn’t sure when that day may come though, as the SEC can delay its decisions and has two more proposed deadlines for each fund before being forced to make a final decision on the 240th day post-filing.

For the awaiting applicants, the final deadlines for the SEC are al mid-March next year.

99.99999% of the world doesn't know that the SEC has to decide on 7 BTC ETFs within the next 3 days:

-blackrock
-bitwise
-vaneck
-wisdomtree
-invesco
-fidelity
-valkyrie

the suits at our doorstep
— odin free (@odin_free) August 29, 2023

What are the SEC’s options post-Grayscale decision?

After today’s ruling in favor of Grayscale, the regulator has 90 days to file an appeal with the U.S. Supreme Court or apply for an En banc review — where a full circuit court can overturn a ruling made by a three-judge panel.

However, the SEC hasn’t made clear what its next move will be.

If the SEC doesn’t appeal the court will need to specify how its ruling is executed which could include instructing the SEC to approve Grayscale’s application, or at the very least revisit it.

Either way, Seyffart only saw two viable options for the regulator.

The first is for it to concede defeat and approve Grayscale’s conversion of its GBTC to a Bitcoin spot ETF.

Alternatively, the SEC would need to revoke the listing of Bitcoin futures ETFs entirely or deny Grayscale’s application based on a new argument, said Seyffart.

The second potential avenue is to deny on reasons not used before/yet... which i have been saying for months could have to do with Custody or settlement of #Bitcoin which is not something that futures ETFs have to worry about. SEC has made a lot of noise around custodians
— James Seyffart (@JSeyff) August 29, 2023

However, fellow Bloomberg ETF analyst Eric Balchunas considered the odds of the SEC revoking the Bitcoin futures ETFs as “highly unlikely” because of the SEC's reported openness to Ethereum futures ETFs.

Lol, this guy turned the last paragraph of Judge Rao's legal smackdown today into an MGMT-esque sythe banger. Really captures the mood rn, well done.. https://t.co/BBJZR5O6To
— Eric Balchunas (@EricBalchunas) August 29, 2023

Magazine: Hall of Flame: Wolf Of All Streets worries about a world where Bitcoin hits $1M

Grayscale Bitcoin Trust nears 2023 highs on BlackRock ETF filing as buyers step up

June 18, 2023 Coin Telegraph

Bitcoin

Institutional buying interest in GBTC accompanies hopes that BlackRock will secure the first U.S. Bitcoin spot ETF.

Bitcoin (BTC) plans by BlackRock appear to have sparked a rally in the “OG” institutional BTC investment vehicle.

Data from monitoring resource CoinGlass shows that on June 17, the Grayscale Bitcoin Trust (GBTC) almost hit new 2023 highs.

GBTC "premium" heads below -37%

Bitcoin market sentiment showed a modest improvement late last week as news emerged that the world’s largest asset manager, BlackRock, had filed to launch a Bitcoin spot price exchange-traded fund (ETF).

While still not allowed in the United States, a spot ETF from a stalwart entity such as BlackRock should have better chances of breaking the legal impasse, some say.

In the meantime, however, signs of optimism beyond sentiment are becoming clearer — GBTC, long trading at a major discount to BTC spot, is on the way up.

According to CoinGlass, that discount, or a negative “premium,” used to characterize GBTC share prices, is currently at -36.6%.

While still heavily discounted, GBTC thus trades closer to zero than at almost any time this year. On June 13, for example, the discount was closer to -44%.

*GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass*

“If the Blackrock ETF does get approved, the real winner here is going to be $GBTC,” Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, wrote in part of Twitter commentary at the weekend.

“Because Blackrock will show the path to conversion, and GBTC's 40%+ discount will resolve on top of industry growth.”

Cochran continued that he thought BlackRock’s offering has “good odds” of getting U.S. regulatory approval.

“Very different structure than other efforts by a behemoth who doesn’t lose. ‘30 act redeemable trust w/ redemptions (unlike GBTC) + proposed rule change filing. They came to play,” he added.

ARK yet to join latest buyers

The BlackRock move is already shrouded in controversy of its own, as market commentators spar over whether it is in fact an ETF at all.

Related: Why is the crypto market up today?

Some argue that it will simply be a similar Trust to GBTC, while others, including Cochran, adopt a more nuanced view.

On the ETF vs Trust debate - plenty of ETFs have alt structures.

This is an ETF as a redeemable trust not like GBTC.

The Trust component is basically what let’s them list shares that represent X amount of BTC since it’s not processing units of BTC directly at a clearinghouse.
— Adam Cochran (adamscochran.eth) (@adamscochran) June 16, 2023

“IT’S OK TO CALL IT AN ETF GUYS,” Cory Klippsten, CEO of Bitcoin financial services firm Swan, summarized.

“Securities Act of 1933 filing under Form S-1, NOT Form N-1A (like 99% of stock ETFs). Will trade on exchange and be redeemable to the issuer. WAY better than GBTC. Now we’ll wait to see if the SEC approves Blackrock’s spot Bitcoin ETF.”

That aside, investor interest in GBTC is rising as a result. Among the eager buyers is hedge fund North Rock Digital.

“We have been accumulating more of the greyscale trusts consistently over the last several weeks,” it announced post-BlackRock.

“RR seems massively skewed at current levels. 50% upside if Greyscale wins, which we expect, and minimal downside if they lose. This filing could be a catalyst to see them tighten to more rational levels.”

One major holder yet to up exposure, meanwhile, is ARK Invest, which continues to hold around 5.37 million GBTC shares.

Data from Cathie's ARK, a dedicated tracking website for ARK CEO, Cathie Wood, confirms those holdings gradually declining through 2023.

*ARK Invest GBTC holdings chart (screenshot). Source: Cathie's ARK*

Magazine: Gary Gensler’s job at risk, BlackRock’s first spot Bitcoin ETF and other news: Hodler’s Digest, June 11-17

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Grayscale Bitcoin Trust

What are the SEC’s options post-Grayscale decision?

GBTC "premium" heads below -37%

ARK yet to join latest buyers

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