Grayscale, a prominent asset manager, has informed the US Securities and Exchange Commission (SEC) that there are no legal grounds to obstruct the conversion of its flagship product into Bitcoin spot exchange-traded funds (ETFs).
In a letter dated September 5, Grayscale's legal team reached out to the SEC to propose a meeting to discuss the next steps following a recent court victory that favored Grayscale's plan to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF.
The letter highlights that, based on the legal analysis employed by the SEC in its prior rejection of Bitcoin spot ETFs, there is no valid reason to differentiate between Bitcoin futures ETFs and Bitcoin spot ETFs. Grayscale believes that the SEC should have concluded that there is "No reason" to treat GBTC differently from a Bitcoin futures ETF, especially since the latter had been previously approved by the Commission.
In late August, a US appeals court dismissed the SEC's attempt to deny Grayscale's request to convert GBTC into a Bitcoin ETF. Grayscale suggests that if there were any other grounds for rejecting the conversion, aside from the requirement in the Exchange Act aimed at preventing fraudulent activities, it should have been evident.
Grayscale also pointed out that the waiting times for its fund conversion applications have been almost three times longer than required under SEC rules. They emphasized that the nearly one million investors in the trust deserve a level playing field as soon as possible. Following the court ruling , the GBTC discount, which indicates the percentage by which an ETF trades above or below its net asset value, has fallen to 19.9% after reaching close to negative 50% at the bottom of the bear market cycle following the FTX crash in December 2022.
