Grayscale has urged the Securities and Exchange Commission (SEC) to simultaneously approve all proposed spot Bitcoin ETFs. The goal is to ensure no individual entity gains an unfair advantage.
The Chief Legal Officer of Grayscale, Craig Salm, conveyed their legal team’s stance in a compelling message on July 27. The letter covered eight spot Bitcoin ETF filings, including Grayscale’s application. It argued against the SEC’s practice of favoring certain applicants over others and instead urged for a just and orderly decision-making process.
Highlighting Interconnectedness: Bitcoin ETFs and Bitcoin Futures ETFs
Highlighting the interconnectedness of spot ETFs and Bitcoin futures ETFs, the letter asserted that the approval pattern for the latter should also extend to the former.
Grayscale questioned the effectiveness of the surveillance sharing agreements (SSAs) between Coinbase and spot ETF providers. Grayscale also deem them insufficient to meet the SEC’s strict standards.
Additionally, Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest recently revised their ETF filings to include SSAs with Coinbase.
Under these agreements, Coinbase would furnish trading book data and other relevant information. This aims to facilitate the SEC’s monitoring efforts, particularly in detecting market manipulation or irregular trading activities.
The setback in June, when the SEC deferred the ETFs’ approval due to the absence of SSAs, faced Grayscale’s counterarguments.
They argued that the SEC’s requirements didn’t explicitly demand the presence of SSAs. This is mainly because Coinbase wasn’t registered as a securities exchange or broker-dealer with the SEC. It is not even registered as a futures exchange with the Commodity Futures Trading Commission.
Grayscale emphasized that approving the ETFs would bring about “positive but abrupt and momentous change” in the SEC’s standard practices. Moreover, it could lead to a potentially unjust favoring of the proposals with an unfair first-mover advantage.
The Grayscale Bitcoin Trust (GBTC), designed to mirror Bitcoin’s price movements, has garnered a substantial investor base, nearly reaching one million, as claimed by Salm.
If the GBTC is transformed into an ETF, it promises to generate significant value for investors. Grayscale firmly believed there was no valid reason for the SEC to withhold a spot Bitcoin ETF from GBTC investors.
In June of the previous year, the SEC denied Grayscale’s request to convert GBTC into a spot Bitcoin ETF. In response to the perceived inconsistency in the treatment of similar investment vehicles, Grayscale took the matter to court, alleging arbitrary actions by the regulatory body.
Shaping the Future: Grayscale’s Vision for Bitcoin ETFs
Grayscale seeks to propel the Bitcoin ETF landscape into a more equitable and transparent future through their impassioned plea for equal treatment and a level playing field. The decision rests with the SEC, whose response will undoubtedly shape the crypto market’s development.
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