Grayscale Submits Comment Letter to SEC Regarding Spot Bitcoin ETF Application

As Grayscale Investments awaits a decision from the DC Circuit in their lawsuit to convert GBTC to a spot bitcoin ETF, the legal team at Davis Polk has submitted a comment letter to GBTC's pending 19b-4 filing. This also includes seven other spot bitcoin ETF filings with newly-proposed surveillance sharing agreements (SSAs).

The comment letter, submitted recently, encapsulates Grayscale's rationale for why the SEC should approve all spot bitcoin ETF applications. The firm remains encouraged by the increased momentum around these filings, underscoring the continued maturation of the bitcoin spot market and reinforcing the belief that American investors should have access to spot bitcoin ETFs in the US.

Grayscale argues that the SEC is already in a position to approve spot bitcoin ETFs, given its previous approval of bitcoin futures ETFs. With third-party studies showing a 99% correlation between Bitcoin's spot and futures markets, surveillance of the CME bitcoin futures market should suffice to protect against potential fraud or manipulation in the underlying spot bitcoin market.

While Grayscale does not view the introduction of an SSA with a spot bitcoin market as the sole solution for getting spot bitcoin ETFs approved in the US, the organization continues to support efforts that enable investors to access the crypto ecosystem. Grayscale applauds progress that brings more oversight to centralized crypto markets and commits to taking necessary action to convert GBTC to an ETF.

Grayscale emphasizes that the SEC's actions related to bitcoin ETFs should be made in a fair and orderly manner. As a disclosure-based regulator, the SEC should provide issuers with feedback or guidance consistently and equitably, without picking winners and losers.

Grayscale believes that for the benefit of Bitcoin, the market, and investors, all spot bitcoin ETF applications should be approved simultaneously. This approach ensures American investors are protected and have access to their choice of bitcoin investment vehicles.

With nearly one million investors across all 50 states owning GBTC, Grayscale stresses that GBTC's conversion to an ETF would return billions of dollars in value to these investors. The firm will continue to advocate for the approval of spot bitcoin ETF applications, emphasizing that there is no reason to keep GBTC investors from the spot bitcoin ETF they deserve.

Grayscale uses the term "ETF" to refer to exchange-traded investment vehicles, including those required to register under the Investment Company Act of 1940, as well as other exchange-traded products not subject to the registration requirements of the '40 Act.