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Despite SEC Win Grayscale May Not Refile its ETF Application as Other Decisions Loom

Published August 31, 2023 4:42 PM
Omar Elorfaly
Published August 31, 2023 4:42 PM

Key Takeaways

  • Grayscale sees no need to refile for an ETF.
  • Judges ruling could potentially make existing application sufficient.
  • The SEC has 45 days to file for a rehearing.
  • Grayscale lawyers will work on pushing the company’s ETF application forward.

In an interview  with Bloomberg, Grayscale CEO, Michael Sonnenshein, addressed questions regarding the company’s plans post its triumph against the US Securities and Exchange Commission (SEC).

Sonnenshein indicated the company may not need to refile to convert its Bitcoin Trust (GBTC) to a spot ETF as he believes the current application may be sufficient following the US District Court’s ruling.

Moving Forward

Court decided the SEC has 45 days to file for a rehearing for a chance to provide a rebuttal to Grayscale’s claim.

“We will have to see upon the final operational procedures that come through that final mandate that the court will issue,” Sonnenshein told  Bloomberg. “We don’t know what the final opinion will say until we reach the end of that period.”

Sonnenshein addressed the interviewer’s query about neighboring ETF applications submitted by companies like BlackRock, which include Surveillance Sharing Agreements (SSA).

He also discussed whether Grayscale believes that rival ETF applications might have an edge over their own.

“There really shouldn’t be any further grounds like the SEC has been relying on to continue denying these types of products from coming to market,” said Grayscale CEO, stating that his company’s application is proven to be sufficient following the court’s ruling.

“The court agreed with us that the arguments we’ve been putting forward all along throughout this process are such that the SEC already has the tools it needs to approve spot Bitcoin products such as GBTC,” said Sonnenshein.

Grayscale’s Argument

Grayscale applied in 2021 to convert its existing Bitcoin Trust (GBTC) into a Bitcoin spot ETF, a natural step since the company has proved itself compliant with anti-money laundering rules posed by the regulating body within its Bitcoin Trust.

The SEC took over a year to respond to the company’s application and then denied it without providing clarity on valid reasons behind the decision.

As a response, Grayscale filed a lawsuit against the SEC for making a decision that was “Arbitrary And Capricious”.

Good News For Wall Street

Wall Street giants such as BlackRock, Fidelity, and ARK Invest have been waiting patiently for a response from the SEC regarding their ETF applications. 

Many of these financial institutions opted to refile their applications, adding Coinbase as a surveillance partner in an attempt to meet the SEC’s requests for a surveillance sharing agreement (SSA) to secure anti-money laundering clauses.

Should the SEC fail to provide a sufficient rebuttal in a rehearing of its Grayscale lawsuit, it will be urged to provide responses to the long list of ETF applications that may shift the landscape of the crypto market as we know it.

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