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Grayscale met with SEC to discuss spot Bitcoin ETF details

November 22, 2023 Coin Telegraph

Bitcoin

Grayscale executives and lawyers met with the SEC to discuss a rule change to list the Grayscale Bitcoin Trust (GBTC).

Executives from crypto asset manager Grayscale have met with the Securities and Exchange Commission to discuss details of its flagship Bitcoin (BTC) trust, which the firm wants to convert to a spot Bitcoin exchange-traded fund (ETF).

A Nov. 20 SEC memo disclosed Grayscale CEO Michael Sonnenshein, legal chief Craig Salm, ETF head Dave LaValle and four other executives, along with five Davis Polk law firm representatives, met with the SEC’s division of trading and markets.

The memo said discussions “concerned NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E.”

Grayscale detailed that it had entered a Transfer Agency and Service Agreement with BNY Mellon, according to a filing shared by Bloomberg ETF analyst James Seyffart.

The bank will act as the agent for its Grayscale Bitcoin Trust (GBTC), facilitating the issuance and redemption of shares and maintaining shareholder accounts.

In a Nov. 21 X (Twitter) post, Seyffart observed the trading and markets division is in charge of approving or denying 19b-4s — a form used to inform the SEC of a proposed rule change by a self-regulatory organization.

Seyffart added Grayscale’s agreement with BNY Mellon was “likely something that was always going to be required at some point” and isn’t an indicator that the GBTC will soon be converted.

Since it feels like everyone is asking. Events of the last few days haven’t changed my & @EricBalchunas’ odds. We can’t go any higher than 90% by Jan 10th. That said, things are continuing to move forward in our view.
— James Seyffart (@JSeyff) November 21, 2023

In a Nov. 22 X post, ETF Store President Nate Geraci opined the “most substantive aspect of Grayscale’s SEC meeting yesterday is that GBTC ‘conversion’ is being referred to as an ‘uplisting.’”

“That doesn’t indicate any issues with conversion to ETF,” he said.

Grayscale has a real shot of dominating this ETF category if it can “uplist GBTC to NYSE Arca on the same day other issuers launch spot BTC ETFs,” and they make a concerted effort to compete on fees, Geraci added.

IMO, most substantive aspect of Grayscale's SEC meeting yesterday (& today's subsequent 8k filing) is that GBTC "conversion" is being referred to as an "uplisting"...

That doesn't indicate any issues w/ conversion to ETF (contrary to the below). https://t.co/yAMBOsRlUs pic.twitter.com/nCZ8Z1ndNO
— Nate Geraci (@NateGeraci) November 22, 2023

Geraci said Grayscale will enter the markets on day one with $20 billion in assets under management, even with BlackRock in the mix.

Grayscale submitted an S-3 form registration statement with the SEC on Oct. 19, which showed its intention to list the shares of GBTC on the NYSE Arca under the ticker symbol GBTC.

In October, a U.S. appellate court issued a mandate for the SEC to review its decision to deny Grayscale’s bid to convert the GBTC to a spot ETF.

The firm is among other major asset managers, including BlackRock and Fidelity, seeking SEC approval for spot Bitcoin ETFs.

Seyffart maintained that “things are continuing to move forward” and his odds of approval — a 90% likelihood that an ETF is approved on or before Jan. 10, 2024 — remained the same.

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Grayscale submits SEC filing to convert Ethereum Trust to spot ETF

October 2, 2023 Coin Telegraph

Coin Telegraph

Crypto asset manager Grayscale has filed an application with the U.S. SEC to convert its Ethereum Trust to a spot Ethereum ETF.

Following the approval of the first Ether (ETH) futures exchange-traded fund (ETF), Grayscale Investments is looking to convert its Grayscale Ethereum Trust to a spot Ether exchange-traded fund (ETF).

The New York Stock Exchange Arca filed for the conversion with the United States Securities and Exchange Commission (SEC) on Oct. 2. Grayscale’s existing trust invested in Ether futures contracts as an indirect means of exposure to ETH, but a spot ETF will invest in the underlying asset itself.

@Grayscale has filed to convert Grayscale Ethereum Trust to a spot ETF. $ETHE

Thank you for your continued support -- our team is just getting started! https://t.co/3nNtfe4Nns
— Sonnenshein (@Sonnenshein) October 2, 2023

Grayscale CEO Michael Sonnenshein announced the move on X (formerly Twitter) and highlighted the firm’s intent to provide conventional investment products offering exposure to cryptocurrency assets:

“As we file to convert ETHE to an ETF, the natural next step in the product’s evolution, we recognize this as an important moment to bring Ethereum even further into the U.S. regulatory perimeter.”

The Grayscale Ethereum Trust was launched in March 2019 and went on to become an SEC reporting company in October 2020, giving the public direct insight into the performance of its cryptocurrency investment vehicle.

At the time of writing, the Ethereum Trust is valued at $4.9 billion and accounts for around 2.5% of circulating ETH. Grayscale also reports that 250,000 investor accounts have exposure to the trust.

Grayscale also indicated that it remains committed to taking its cryptocurrency products through an “intended four phase lifecycle” ending with a conversion to an ETF. The platform currently offers 17 different cryptocurrency investment products.

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Grayscale asks SEC to meet on ‘way forward’ for Bitcoin ETF conversion

September 6, 2023 Coin Telegraph

Bitcoin

“We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible,” Grayscale's lawyers wrote to the regulator.

Grayscale has told the Securities and Exchange Commission it has no legal reasoning left to block the conversion of the asset manager’s flagship Bitcoin (BTC) fund to a spot exchange-traded fund (ETF).

On Sept. 5, Grayscale’s lawyers sent a letter to the SEC requesting the pair meet to discuss the next steps following the regulator’s court loss regarding the conversion of the Grayscale Bitcoin Trust (GBTC).

“Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.”

Grayscale added it believes the SEC should conclude there are "no grounds" for treating the GBTC differently from Bitcoin futures ETFs whose filings "the Commission has previously approved."

On Aug. 29, a United States Appeals Court ruled against the SEC’s denial of Grayscale’s application to convert its GBTC to a spot Bitcoin ETF.

*Screenshot of the letter sent to the SEC by Grayscale’s retained law firm Davis Polk. Source: Grayscale*

Grayscale said if there was any other reason for rejecting the conversion besides the Exchange Act’s requirement that rules be “designed to prevent fraudulent and manipulative acts and practices,” it would have already been made apparent.

“We are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot Bitcoin filings even after Bitcoin futures ETPs began trading,” Grayscale wrote.

Grayscale added its fund conversion application has been pending for nearly three times longer than the length of time stipulated by the SEC’s rules.

Joseph A. Hall — who also penned Grayscale’s letter in July urging the SEC to approve all pending ETF applications together — concluded his latest letter by saying:

“We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible.”

Since the Aug. 29 court ruling the GBTC discount — the percentage showing how far off an ETF is trading above or below its net asset value — has fallen to 19.9%.

GBTC’s discount was nearing negative 50% during the bear cycle bottom following the FTX collapse in December 2022.

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