Grayscale Appeals to SEC for Simultaneous Approval of Multiple Bitcoin ETFs

Grayscale, a prominent crypto fund manager, is calling on the Securities and Exchange Commission (SEC) to approve all proposed spot Bitcoin exchange-traded funds (ETFs) simultaneously to avoid favoring one over the others. In a post on July 27, Craig Salm, Chief Legal Officer at Grayscale, revealed that the company’s legal team had submitted a letter regarding eight spot Bitcoin ETF filings, including their own, arguing for a fair and orderly decision-making process.

The letter put forth the argument that the SEC could approve spot ETFs based on its previous approvals for Bitcoin futures ETFs, as the two fund types are closely linked. Grayscale also addressed the recent surveillance sharing agreements (SSAs) between Coinbase and the spot ETF providers, asserting that these agreements were not a new idea and might not meet the SEC’s standards.

Various ETF filings from major financial institutions, such as Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest, were recently updated to include SSAs with Coinbase. These agreements would involve Coinbase sharing trading book data and other information with the SEC to monitor potential market manipulation or irregular trading activities.

In late June, the SEC delayed the ETF approvals, citing the need for SSAs due to concerns about possible manipulation in the crypto markets. Grayscale, however, contested that the SSAs “would neither satisfy nor be necessary” under the SEC’s standards, arguing that Coinbase is not registered with the SEC as a securities exchange or broker-dealer, nor with the Commodity Futures Trading Commission as a futures exchange.

Grayscale emphasized that approving these ETFs would represent a significant shift in the SEC’s application of its standards and could create an unfair advantage for these proposals. They urged the SEC not to grant a discriminatory first-mover advantage.

The Grayscale Bitcoin Trust (GBTC), which tracks Bitcoin’s price, currently has nearly one million investors. Grayscale believes that if GBTC is converted into an ETF, it could return substantial value to investors, making it imperative for the SEC to consider approving spot Bitcoin ETFs.

Grayscale previously applied to convert GBTC into a spot Bitcoin ETF in June, but the SEC denied the application. In response, Grayscale filed a lawsuit against the regulator, accusing it of arbitrary treatment by failing to apply consistent standards to similar investment vehicles.

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