Marching on with its recent court victory, a new Grayscale letter urges the US Securities and Exchange Commission (SEC) to expeditiously approve its spot Bitcoin ETF filing as there is no reason left behind after the court ruling to reject the proposed ruled change by NYSE Arca to convert its GBTC to a spot ETF.
The Grayscale legal team from Davis Polk & Wardwell and Munger Tolles & Olsen on Tuesday, September 5, delivered a letter to the US federal securities regulator saying that its client is ready to meet with the SEC staff “as soon as practical to discuss the way forward in view of recent developments in the Trust’s ongoing effort to convert to an exchange-traded product (“ETP”).”
Today, our legal team and counsel at Davis Polk & Wardwell and Munger Tolles & Olsen delivered a letter to the SEC with important information to consider as it decides on next steps for $GBTC. (1/3) pic.twitter.com/OHGlyvjcAm
— Grayscale (@Grayscale) September 5, 2023
No Reason to Treat Bitcoin Futures and Spot ETF Differently: Says Grayscale
As reported, on August 29, US Court of Appeals Circuit Judge Neomi Rao ordered that GBTC’s petition for review be granted and that the SEC’s order to deny the GBTC listing application be vacated. Per the letter, with this court decision and arguments put forward by the crypto assets manager, NYSE Arca, and public comments, there is no ground to treat Grayscale’s spot ETF application differently from futures ETFs approved by the SEC.
Grayscale further said that if any other argument could be offered in differentiating futures and spot Bitcoin ETF, it would surface by now “in one of the fifteen Commission orders that rejected spot Bitcoin Rule 19b-4 filings even after Bitcoin futures ETPs began trading.” The letter reads:
“After the Commission has had the opportunity to fully analyze the court’s opinion in light of the record, including the reasons for rejection set forth in the vacated order as well as the evidence and arguments put forward by Grayscale, NYSE Arca and public commenters, we believe the Commission should conclude that there are no grounds for treating the Trust differently from ETPs that invest in bitcoin futures […], and therefore move expeditiously to approve the Trust’s Rule 19b-4 filing as well.”
Grayscale’s legal team also provides three points they believe the SEC should take into account as it considers the next steps. First, the proposed rule change has now been pending for nearly three times the length permitted by the law, causing GBTC investors to “bear unjustified harm in the form of shares that trade at a substantial discount to net asset value.” This could be avoided by allowing the trust to operate as a spot Bitcoin ETF.
Secondly, investors strongly prefer spot ETFs, and they “should not be forced into less efficient and more complicated product structures simply because these are the only product types yet to gain Commission approval.”
Lastly, there should be no additional requirement for a surveillance-sharing agreement for spot Bitcoin ETFs, as futures ETF approvals show that a single surveillance-sharing agreement is enough to curb market manipulation fears.
The letter concludes:
“The Trust is ready to operate as an ETP upon Commission approval. And so we hope you will agree that the best use of resources now is for the Commission to issue an order approving NYSE Arca’s Rule 19b-4 filing and authorize the staff to work with Grayscale and NYSE Arca to finalize the prompt listing of the Trust’s shares. We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible.”