Grayscale, a crypto fund manager, is urging the Securities and Exchange Commission (SEC) to approve all proposed spot Bitcoin (BTC) exchange-traded funds (ETFs) simultaneously to prevent any one ETF from having an advantage over the others. In a post on July 27, Grayscale’s chief legal officer Craig Salm stated that the company’s legal team submitted a letter concerning eight spot Bitcoin ETF filings, including its own, arguing that the SEC should make a fair and orderly decision and not pick “winners and losers”.
According to Grayscale, the SEC could approve the spot ETFs based on its previous approvals for Bitcoin futures ETFs, as the two fund types are closely connected. The company also noted that the recent surveillance sharing agreements (SSAs) between Coinbase and the spot ETF providers are “not a new idea” and would not meet the SEC’s standards.
ETF filings from Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest have recently been updated to include SSAs with Coinbase. These agreements allow Coinbase to share information on its trading books and other relevant data so that the SEC can monitor any potential market manipulation or irregular trading activity.
In late June, the SEC pushed back on the ETFs due to the absence of SSAs, citing concerns about the potential manipulation of crypto markets. However, Grayscale argued that the SSAs “would neither satisfy nor be necessary” under the SEC’s standards since Coinbase is not registered with the SEC as a securities exchange or broker-dealer, nor with the Commodity Futures Trading Commission (CFTC) as a futures exchange.
Grayscale emphasized that approving the ETFs would represent a significant change in the SEC’s application of its standards and would unfairly grant a first-mover advantage to these proposals. The company’s Bitcoin Trust (GBTC), which aims to track Bitcoin’s price, currently has almost 1 million investors. If it is converted into an ETF, it could potentially return billions in value to investors.
Notably, the SEC denied Grayscale’s application to convert the GBTC to a spot Bitcoin ETF last June. In response, Grayscale filed a lawsuit against the regulator, accusing it of acting arbitrarily and failing to apply consistent treatment to similar investment vehicles.
In conclusion, Grayscale is advocating for the approval of spot Bitcoin ETFs by the SEC to be done simultaneously, without giving any particular ETF an advantage over the others. The company believes that the SEC should consider the previous approvals for Bitcoin futures ETFs and not require SSAs, as they do not meet the regulatory standards. Grayscale’s legal battle with the SEC regarding the conversion of GBTC to a spot Bitcoin ETF is still ongoing.
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