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Grayscale Met With The SEC, Tried To Convince Them To Turn The GBTC Into An ETF

Will GBTC get to grow to be the primary US-based spot bitcoin ETF? The euphoria from six months in the past was Grayscale hinting that it would sue the SEC if its request is denied. Currently, the local weather dictates that the reply will most likely be unfavorable, however the firm shouldn’t be giving up. According to CNBC, Grayscale “met privately with the Securities and Exchange Commission last week in an effort to persuade the regulator to approve the conversion of its flagship fund into an ETF.”

Related Reading | Grayscale Removes Bancor (BNT) And Universal Market Access (UMA) From Its DeFi Fund

The Grayscale Bitcoin Trust, also called GBTC, “holds roughly 3.4% of the world’s bitcoin and is owned by more than 850,000 U.S. accounts, according to Grayscale.” For greater than a yr it has traded at round a 25% low cost to BTC’s value. According to Grayscale, in the meanwhile that the SEC approves the product’s transformation into an ETF, the low cost will finish and it’ll unlock “up to $8 billion in value for investors.”

Take under consideration that VanEck’s, BlockFi’s, and different latest functions for a spot bitcoin ETF have been rejected. And that Grayscale has been making use of to get one since 2017. This time round, the SEC has till July sixth to approve or deny the GBTC utility.

What Would Happen If The GBTC Turns Into An ETF

To reply this query, Grayscale made “a 24-page presentation” for the SEC. Some graphs from the doc are in the CNBC report, though in low decision. In basic, the GBTC’s transformation right into a spot bitcoin ETF “would open them up to ordinary investors in a familiar wrapper that trades like a stock.” 

The important argument from Grayscale is {that a} bitcoin futures ETF already exists, and the “SEC is discriminating against issuers” by not letting any firm create a spot bitcoin ETF. “ Grayscale contended that a spot bitcoin ETF is “no riskier” than futures-based ETFs, as a result of the 2 markets are each affected by the underlying value of bitcoin and monitor one another intently.”

Back in April Grayscale’s CEO, Michael Sonnenshein, felt extra litigious when he stated:

“If the SEC can’t look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation.”

The SEC go to and the specter of authorized motion haven’t been Grayscale’s solely weapon. According to CNBC, to assist remodel the GBTC into an ETF, “the investment firm has helped coordinate a public letter-writing push, flooding the SEC with more than 3,000 letters in support of its application.”

GBTC value chart on FTX | Source: GBTC/USD on TradingView.com

How Would A Spot Bitcoin ETF Affect The Market?

Opinions range. There are establishments that may’t put money into bitcoin as an asset, however might positively put their cash in an ETF. Some consider that the sudden inflow of funds that these individuals would convey would ship bitcoin’s value to the moon. Unlike a future ETF which solely holds future contracts, a spot ETF must purchase the bitcoin it’ll signify. So, the cash would positively enter the bitcoin ecosystem.

Related Reading | SEC, Ripple Agree To Extend Legal Battle Until 2023; XRP Bears The Brunt Of Case

On the opposite hand, Bitcoiners don’t see what they deem as “paper bitcoin” with good eyes. The monetary instrument would signify bitcoin, however the ETF isn’t the asset per se. This brings forth sure vulnerabilities to the bitcoin community. The “paper bitcoin” might be thought of inflation and one thing akin to fractional reserve banking is technically attainable.

In any case, neither group has the finger on the set off. The SEC and solely the SEC does.

Featured Image by Aymanejed on Pixabay | Charts by TradingView

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