The SEC’s Decision on GBTC

Last Update 06/29/2022

Grayscale Investors,

Today, we received notice that our application to uplist GBTC to a spot ETF was denied by the SEC. We are deeply disappointed by and do not agree with its decision.

Uplisting GBTC to a spot Bitcoin ETF would have brought the world’s largest Bitcoin fund further into the U.S. regulatory perimeter and provided U.S. investors access to Bitcoin through the familiar protections of an ETF wrapper. As of June 29, 2022, GBTC shares traded at an approximately 30% discount to NAV, representing ~$8 billion of unrealized shareholder value. We hold firm in our belief that uplisting GBTC to a spot Bitcoin ETF remains the best option for investors: it would effectively eliminate the discount and cause the shares to track the price of Bitcoin.

The SEC is failing to apply consistent treatment to Bitcoin investment vehicles as evidenced by its denial of GBTC’s application for uplisting to a spot ETF, but approval of several Bitcoin futures ETFs. If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold that same asset.

It is the SEC’s arbitrary and capricious actions and discriminatory treatment of issuers that necessitates elevating this matter to the courts in the best interest of GBTC and our investors. Accordingly, today our Senior Legal Strategist and former U.S. Solicitor General, Donald B. Verrilli, Jr., filed a petition for review on behalf of Grayscale with the United States Court of Appeals for the D.C. Circuit—the first step in the litigation process.

At Grayscale, we have not and will not waver in our commitment to uplisti GBTC to a spot Bitcoin ETF. The decision to pursue litigation is not one we take lightly, but we are confident in our legal team, as well as our compelling, common-sense legal arguments. Our in-house counsel will work closely with Mr. Verrilli and the team at Davis Polk to make these arguments over the coming months.

We will communicate with you each step along the way.

– The Grayscale Team