ETF Update: Our Recent SEC Meeting

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As part of our filing to convert our flagship product, Grayscale® Bitcoin Trust (OTCQX: GBTC), to a Spot Bitcoin ETF, there’s a standard 240-day open review period. To date, over 4,000 comments have been submitted to the Securities and Exchange Commission for consideration as part of this process. 

But we’re not just relying on you to advocate. We continue to maintain an open and regular dialogue with regulators and policymakers as we look ahead to July 6th. In fact, last month we again met with the SEC to make our case.

You can download our full presentation to the SEC here, but here are some of the highlights: 

1. Investor interest in crypto is high, and an ETF would make it easier to invest. 

We know this from reading the 4,100+ comments on our application to convert GBTC to an ETF, but third party research backs this up.
2. GBTC has grown to become the largest publicly traded digital asset fund and a top commodity fund, with over 865,000 investors.

GBTC has a strong history of asset growth, is a top 3 commodity fund by AUM and a top 10 commodity fund by liquidity.

3. GBTC ETF conversion will reduce discounts and premiums, and unlock approximately $8B for investors.

 

We want to close this discount as much as anyone else, and we want a lasting solution. Learn more about how and why this will change: 

 

https://grayscale.com/qa-what-converting-gbtc-to-an-etf-would-mean/

Source: Grayscale Investments, LLC and OTCQX (OTC Markets)

4. Grayscale has voluntarily worked together with the SEC for years to enhance disclosures for the benefit of investors.

 

When the SEC requests additional information about one of our SEC Reporting Company Products, we promptly provide it and then incorporate the additional disclosure into the filings of all other products. That includes GBTC!

Source: Grayscale Investments, LLC correspondence with SEC 

5. The SEC is discriminating against issuers by approving Bitcoin Futures ETFs and denying Spot Bitcoin ETFs

 

Prior to April 6, the SEC had only approved Bitcoin futures ETFs registered under the Investment Company Act of 1940, or ‘40 Act while denying all Spot Bitcoin ETFs that would have been registered under the Securities Exchange Act of 1934 or ‘34 Act. This included applications for ETFs that would have been offered by Fidelity, WisdomTree, Ark/Coinshares, NYDIG, and GlobalX.

 

The SEC’s stated reasoning for treating these investment products differently was due to distinctions between the ’40 Act and ’34 Act, in particular investor protections against “fraudulent and manipulative acts and practices. We believe these are distinctions without a difference. Furthermore, by approving a futures ETF registered under the ‘34 Act, the SEC has conceded that it is not concerned with fraud or manipulation in the underlying Bitcoin markets (or at least not enough to deny a Bitcoin ETF). We covered this in more detail in a recent blog post.

6. The US lags global markets, with other jurisdictions providing Bitcoin (and other digital asset) exchange-traded products.

 

A recent executive order from the Biden White House states that “The United States also has an interest in ensuring that the benefits of financial innovation are enjoyed equitably by all Americans and that any disparate impacts of financial innovation are mitigated.” It’s too late to be the first in the world, but this could be a key opportunity to regain leadership.

Source: Bloomberg

We believe strongly in the basis of these arguments and will continue to put the full resources of the firm behind GBTC’s conversion. The SEC has until July to respond, but you don’t have to wait that long to form your own opinion. If you have been, currently are, or will be an investor in GBTC, Bitcoin or other digital assets, your voice matters. Share your thoughts in your own comment: 

 

Learn How to Email the SEC

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