In the wake of a recent ruling by the U.S. District Court, which deemed the US Securities and Exchange Commission (SEC) “arbitrary and capricious” in its rejection of Grayscale’s application to transform its Bitcoin Trusts (GBTC) into a Bitcoin spot ETF, Grayscale Investments has entered into new discussions with the SEC.
This development holds substantial implications for the Bitcoin market, and the industry eagerly awaits the outcome, as it signifies a significant stride towards expanding the accessibility of digital assets to mainstream investors.
Grayscale Investments has reportedly again started talking with the U.S. Securities and Exchange Commission (SEC) about the details of its application to transition its trust product, GBTC, into a spot Bitcoin exchange-traded fund (ETF).
This development may significantly impact the Bitcoin market.
The industry sees the SEC’s approval of one or more ETF applications as a major step forward that might facilitate normal investors’ access to digital assets, and they are eagerly expecting this development. The person, who wished to remain anonymous because the conversations are still private, claims that Grayscale has kept in touch with the SEC’s Division of Trading and Markets and Division of Corporation Finance ever since winning its court battle.
Due to its current Grayscale Bitcoin Trust (GBTC), Grayscale and the SEC have a long history together. However, when Grayscale attempted to introduce an ETF that would hold direct cryptocurrency assets, the agency rejected the proposal.
After a protracted legal struggle in federal court in the United States, a panel of judges concluded that the SEC’s decision was “arbitrary and capricious” and ordered the agency to remove the document. It resubmitted tha application to the regulator after last month court’s ruling finalisation.
Chief legal officer of Grayscale, Craig Salm, said, “Right now we’re just laser-focused on constructively reengaging with Trading and Markets,” though he did not elaborate on the specifics of that conversation.
“There are still issues that need to be resolved,” Salm stated in an interview. He added that other applicants for Bitcoin ETFs, which include major financial institutions like Fidelity and BlackRock, appeared to be moving forward with their own registrations in SEC discussions. “Overall, it’s been good engagement, and it’s a matter of when, not a matter of if anymore.”
Grayscale Investments CEO Michael Sonnenshein stated the company is still in talks with the SEC about launching a spot-Bitcoin ETF. However, he didn’t rule out taking more legal actions and said he hasn’t discussed any timeline with regulators yet.
SEC Chair Gary Gensler refused to comment when asked two weeks ago what his agency will do with Grayscale’s application and the others while the commission waits for staff recommendations.
In the meantime, he earlier on Wednesday released a film highlighting the work of the agency’s corporate finance division, which deals with “rapidly evolving technology and business models” and is crucial to Grayscale’s utilisation.
In an interview for on SiriusXM radio, Salm expressed his optimism by saying that the question of when an impending spot bitcoin exchange-traded fund would launch is more important than if.
The fact that Grayscale is being pretty optimistic can be sen in its job ad where it seeks ETF associate and product specialists.
According to the add “the Associate will assist Grayscale’s ETF team in all phases of the product life cycle including product strategy, ideation, listing and post launch support.”
This position involves being at the forefront of establishing an ETF issuing entity and collaborating with internal teams and external partners, such as sub-advisors, market makers, compliance, sales, and custodians. The ideal candidate should prioritize teamwork, demonstrate self-motivation, excel at multitasking, and infuse the work environment with a positive attitude and entrepreneurial mindset.
Although the industry is hopeful that a spot Bitcoin ETF is getting closer, there are still a lot of procedures that need to be taken before one is released into the market, and the regulator’s intention to approve one does not always follow from the decision not to appeal.
On Monday, November 6, 2023, the market experienced a panic as unfounded rumours circulated that the SEC had approved a spot bitcoin ETF. Following the news, Bitcoin shot up to $37,000. On the other hand, Grayscale’s LINK is up big again today and up over 525% YTD.