Grayscale Bitcoin ETF Plans to Adopt Cash Redemption Model
Grayscale has filed an updated document with the Securities and Exchange Commission (SEC) to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin exchange-traded fund (ETF) that uses a cash redemption model. This move aligns with the SEC’s requirement for cash-only creation and redemption in ETFs. Other investment firms, including BlackRock, ARK Invest, and 21Shares, have also adopted this model to comply with regulations.
Transitioning to Cash Redemption
The cash creation and redemption model means that investors must use cash instead of Bitcoin for transactions. Unlike traditional ETFs, investors cannot exchange BTC for ETF shares. This change is part of Grayscale’s effort to meet regulatory standards.
Confusing Changes in the Filing
In addition to the cash redemption model, Grayscale’s filing includes a puzzling change regarding airdrops and forks. The company appears to be abandoning these features, which finance lawyer Scott Johnson finds unusual. It is unclear why Grayscale made this change, as other issuers have not made similar adjustments.
Hashdex Meets with SEC Chair
Meanwhile, Hashdex, another Bitcoin ETF issuer, recently met with SEC Chair Gary Gensler. This meeting differs from typical interactions between issuers and the SEC, as it took place directly with Gensler rather than other divisions within the agency.
Hot Take: Grayscale Seeks Regulatory Compliance for Bitcoin ETF
Grayscale’s decision to submit an amended filing to adopt a cash redemption model demonstrates its willingness to comply with the SEC’s requirements. This move brings GBTC closer to transitioning into a spot Bitcoin ETF. As more investment firms adopt this model, the cryptocurrency industry continues to evolve and meet regulatory standards.
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