Grayscale's Latest GBTC Comment Letter

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Craig Salm
Last Update 07/27/2023

As we await a decision from the DC Circuit in our lawsuit to uplist GBTC to a spot bitcoin ETF, our legal team at Davis Polk submitted a comment letter to GBTC’s pending 19b-4 filing, as well as seven other spot bitcoin ETF filings with newly-proposed surveillance sharing agreements (SSAs). The comment letter was submitted to capture Grayscale’s rationale for why the SEC should approve all spot bitcoin ETF applications. 

We remain encouraged by the increased momentum around spot bitcoin ETF filings. Not only does this underscore the continued maturation of the bitcoin spot market, but it also reinforces our long-held belief that American investors should have access to spot bitcoin ETFs in the US. 

There are a few key points in the comment letter worth highlighting:  

First, as we’ve articulated in our lawsuit, the SEC is already in a position to approve spot bitcoin ETFs based on its previous approval of bitcoin futures ETFs. Bitcoin’s spot and futures markets are inextricably linked (as evidenced by third-party studies showing 99% correlation). This means surveillance of the CME bitcoin futures market – a CFTC-regulated market of significant size and member of the Intermarket Surveillance Group, a global network of exchanges that share market surveillance – should sufficiently serve to protect against potential fraud or manipulation in the underlying spot bitcoin market. We also addressed this at length in our oral arguments, available here 

To be clear: although we do not believe the introduction of an SSA with a spot bitcoin market is or should be the “silver bullet” to getting spot bitcoin ETFs approved in the US, as an organization with a deep history of embracing US financial rules and regulations, Grayscale continues to support any effort that enables investors to access the crypto ecosystem, and we applaud all progress that brings more oversight to centralized crypto markets. We will also take any action necessary to uplist GBTC to an ETF.

Moreover, the SEC’s actions related to bitcoin ETFs should be made in a fair and orderly mannerAs a disclosure-based regulator, the SEC should not pick winners and losers; instead, the SEC should continue to provide issuers with feedback or guidance consistently and equitably. 

Whether the SEC ultimately approves a spot bitcoin ETF following a Court mandate or through an evolution in its position on the matter, they should do so in a way that’s fair for all investors and issuers. At Grayscale, we believe that for the benefit of Bitcoin, the market, and investors, all spot bitcoin ETF applications should be approved simultaneously.  

Ultimately, this is about ensuring American investors are protected and have access to their choice of bitcoin investment vehicle. There are nearly one million investors across all 50 states who own GBTC, and GBTC’s uplisting to an ETF would return billions of dollars in value to these investors. When the SEC is ready to approve spot bitcoin ETF applications, there is simply no reason to keep GBTC investors from the spot bitcoin ETF they deserve. We will continue to advocate for this cause on behalf of our investors. 

We use the generic term “ETF” to refer to exchange-traded investment vehicles, including those that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), as well as other exchange-traded products that are not subject to the registration requirements of the ‘40 Act. 

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