Grayscale has told the Securities and Exchange Commission it has no legal reasoning left to block the conversion of the asset manager’s flagship Bitcoin (BTC) fund to a spot exchange-traded fund (ETF).
On Sept. 5, Grayscale’s lawyers sent a letter to the SEC requesting the pair meet to discuss the next steps following the regulator’s court loss regarding the conversion of the Grayscale Bitcoin Trust (GBTC).
“Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.”
Grayscale added it believes the SEC should conclude there are “no grounds” for treating the GBTC differently from Bitcoin futures ETFs whose filings “the Commission has previously approved.”
On Aug. 29, a United States Appeals Court ruled against the SEC’s denial of Grayscale’s application to convert its GBTC to a spot Bitcoin ETF.
Screenshot of the letter sent to the SEC by Grayscale’s retained law firm Davis Polk. Source: Grayscale
Grayscale said if there was any other reason for rejecting the conversion besides the Exchange Act’s requirement that rules be “designed to prevent fraudulent and manipulative acts and practices,” it would have already been made apparent.
“We are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot Bitcoin filings even after Bitcoin futures ETPs began trading,” Grayscale wrote.
Grayscale added its fund conversion application has been pending for nearly three times longer than the length of time stipulated by the SEC’s rules.
Joseph A. Hall — who also penned Grayscale’s letter in July urging the SEC to approve all pending ETF applications together — concluded his latest letter by saying:
“We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible.”
Related: Grayscale wins the court battle, but what does this mean for a spot Bitcoin ETF?
Since the Aug. 29 court ruling the GBTC discount — the percentage showing how far off an ETF is trading above or below its net asset value — has fallen to 19.9%.
GBTC’s discount was nearing negative 50% during the bear cycle bottom following the FTX collapse in December 2022.
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