Grayscale Letter to SEC on Spot Bitcoin ETF Applications

Grayscale Dismisses Excitement Over Spot Bitcoin ETF Applications

Grayscale, an asset management company, has written a letter to the SEC to address the growing excitement around new applications for spot bitcoin ETFs. Here are the key points:

1. Surveillance-sharing agreements: Grayscale argues that these agreements with Coinbase are not necessary or sufficient under the current regulatory standard.
2. SEC reviewing applications: The SEC is currently reviewing spot fund applications from various fund managers, including BlackRock and Fidelity.
3. Grayscale’s rejected proposal: Grayscale had previously proposed converting its flagship GBTC fund into a spot bitcoin ETF but was rejected. This led to a lawsuit against the SEC.
4. SEC’s position: Grayscale’s lawyer argues that the SEC already has the power to approve a spot fund using the same standard applied to bitcoin futures ETFs.
5. Support for regulatory approval: Grayscale supports a regulatory approval that includes all previously disapproved spot bitcoin ETF proposals.

Grayscale’s Argument Against Surveillance-Sharing Agreements

Grayscale’s lawyer highlights the SEC’s skepticism regarding pricing data from unregulated bitcoin trading venues, questioning the relevance of surveillance-sharing agreements with Coinbase.

SEC Chair’s Skepticism and Grayscale’s Criticism

SEC Chair Gary Gensler has expressed skepticism about crypto markets, while Grayscale lawyers have criticized the SEC for approving a leveraged bitcoin futures ETP while rejecting spot bitcoin ETPs.

Hot Take

Grayscale’s letter challenges the excitement surrounding new spot bitcoin ETF applications and argues for equal treatment of all proposals. The company believes that the SEC already has the authority to approve a spot fund and any approval should include previously rejected proposals. Grayscale also questions the relevance of surveillance-sharing agreements and highlights the SEC’s inconsistent treatment of spot and futures ETPs. These arguments add to the ongoing debate over the regulation of crypto assets.