Grayscale CEO, Michael Sonnenshein, announced that the company’s “legal team submitted a comment letter to $GBTC’s 19b4 application on behalf of all @Grayscale investors.”
This comes in light of a recent ruling by the US District Court stating that the US Securities and Exchange Commission (SEC) was wrong when rejected Grayscale’s application to convert its Bitcoin Trusts (GBTC) to a Bitcoin spot ETF, calling it “arbitrary and capricious”.
“On behalf of our client Grayscale Investments, LLC, sponsor of Grayscale Bitcoin Trust (BTC), we would appreciate the opportunity to meet with the staff of the Securities and Exchange Commission 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”),” reads the introduction of the letter filed by Grayscale lawyers.
The letter goes on explaining the proceedings thus far between the company and the regulating body. In 2021, Grayscale applied to convert GBTC to a spot ETF, and after a year of silence, the regulatory body responded with a rejection.
As a result, Grayscale filed a lawsuit against the SEC, claiming the commission acted in a manner that was “arbitrary and capricious”.
“Grayscale thereafter sought review of the Commission’s decision in the U.S. Court of Appeals for the D.C. Circuit pursuant to, and on August 29, 2023 the Court of Appeals vacated the Commission’s disapproval order.
“If any other reason could be offered in attempting to differentiate spot bitcoin ETPs from bitcoin futures ETPs—whether based on the Exchange Act’s requirement that rules be “designed to prevent fraudulent and manipulative acts and practices” or otherwise—we are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot bitcoin Rule 19b-4 filings even after bitcoin futures ETPs began trading.”
Grayscale’s letter then urges the regulator to take prompt action regarding the company’s application, saying “the Commission’s review of the Trust’s Rule 19b-4 filing has now driven on significantly longer than the time allowed.”
Finally, the company’s lawyers request that the SEC consider three main points when it comes to moving on with the ETF application:
All the while, former Chair of the US Securities and Exchange Commission Jay Clayton discussed ETF applications filed by the likes of BlackRock and Grayscale during an interview with CNBC.
“It is clear that Bitcoin is not a security. It is clear that bitcoin is something that retail investors want access to, institutional investors want access to, and, importantly, some of our most trusted providers who are fiduciaries or have duties of best interest want to provide this product to the retail public. So I think […] an approval is inevitable,” said Clayton.
“The dichotomy between a futures product and cash product can’t go on forever.”