Grayscale legal team seeks SEC meeting over proposed Bitcoin ETF conversion
The company's legal team sent a letter to the regulator on Sept. 5 requesting to discuss next steps in the wake of recent court decisions.
Top executives at Grayscale have asked to meet with the U.S. Securities and Exchange Commission (SEC) to discuss a planned spot Bitcoin ETF.
The company’s legal team sent a letter to the SEC on Sept. 5, writing:
“We would appreciate the opportunity to meet with the staff of the [SEC] as soon as practical to discuss the way forward in view of recent developments in [the] ongoing effort to convert [Grayscale Bitcoin Trust] to an exchange-traded product (“ETP”).
That request follows more than a year of developments. In June 2022, the SEC rejected a rule change that would have allowed Grayscale to offer its product.
Grayscale soon took the matter to court in an effort to obtain a review of the SEC’s decision. On Aug. 29, 2023, a court issued a ruling that might force the SEC to reconsider the application. However, reports from the Wall Street Journal suggest that the SEC is merely reviewing the order; the SEC could choose to appeal the court’s ruling or deny Grayscale’s proposal once again, among other possibilities.
As the ruling does not provide guaranteed approval, Grayscale attempted to convince the SEC to approve its proposal throughout its letter. Grayscale described similarities between its product and others as one factor that could justify approval of its product. It also argued that delayed approval could harm investors. It asserted that investors should not be forced to invest in “less efficient and more complicated product structures.”
Grayscale also commented on various other spot Bitcoin ETF applications that the SEC has recently received. Grayscale said that the SEC should not impose new rules that would require ETF applications to have a surveillance-sharing agreement with Coinbase in line with those other pending ETFs. Rather, Grayscale argued that a surveillance-sharing agreement with the Chicago Mercantile Exchange (CME) — the exchange on which its product would trade — should be sufficient.
Grayscale is ready to offer ETF
Grayscale added that its proposed fund is “ready to operate” if the SEC grants approval and finally urged the regulator to approve the required rule change.
The letter is signed by Joseph A. Hall, an attorney for Grayscale at DavisPolk. A “carbon copy” list following the signature includes Grayscale CEO Michael Shonnenstein, Grayscale CLO Craig Salm, and two other legal representatives. It is unclear which company members plan to meet with the SEC if it grants Grayscale’s request.
Though the letter describes Grayscale’s planned investment vehicle as an exchange-traded product (ETP), it is more commonly referred to as an exchange-traded fund (ETF) — which is a specific type of exchange-traded product.