Grayscale, the prominent crypto asset manager, recently held a crucial meeting with the Securities and Exchange Commission (SEC) to discuss the transformation of its flagship Bitcoin trust into a spot Bitcoin exchange-traded fund (ETF).
The meeting, which took place on November 20th, involved key figures such as Grayscale CEO Michael Sonnenshein, legal chief Craig Salm, ETF head Dave LaValle, and four other executives, alongside five representatives from the Davis Polk law firm.
The primary focus of these discussions was NYSE Arca, Inc.’s proposal to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E, as revealed in an SEC memo.
Grayscale has taken significant steps to advance this conversion, including entering into a Transfer Agency and Service Agreement with BNY Mellon, a major financial institution. Under this agreement,
BNY Mellon will serve as the agent for Grayscale Bitcoin Trust (GBTC), overseeing the issuance and redemption of shares and maintaining shareholder accounts.
Bloomberg ETF analyst James Seyffart noted that the collaboration with BNY Mellon was a strategic move, likely necessary for the conversion process but not necessarily indicative of an imminent transformation of GBTC.
Moreover, it was observed that the SEC’s division of trading and markets plays a crucial role in approving or denying 19b-4s, which are used to notify the SEC of proposed rule changes by self-regulatory organizations.
In a Twitter post on November 22nd, ETF Store President Nate Geraci emphasized a significant aspect of Grayscale’s meeting with the SEC, referring to the GBTC conversion as an “uplisting.”
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Geraci pointed out that Grayscale could gain a substantial advantage in the ETF category if they manage to “uplist GBTC to NYSE Arca” simultaneously with other issuers launching spot Bitcoin ETFs.
He stressed the importance of competitive fees in this endeavor and projected that Grayscale could enter the market with a substantial $20 billion in assets under management, even competing with industry giants like BlackRock.
Grayscale had previously submitted an S-3 form registration statement with the SEC on October 19th, expressing its intent to list GBTC shares on NYSE Arca under the ticker symbol GBTC.
In October, a U.S. appellate court directed the SEC to review its decision to deny Grayscale’s request to convert GBTC into a spot ETF.
Grayscale joins other major asset managers, including BlackRock and Fidelity, in seeking SEC approval for spot Bitcoin ETFs.
Seyffart remained optimistic about the progress of these developments, maintaining a 90% likelihood of ETF approval on or before January 10, 2024.
This indicates that the crypto industry continues to navigate regulatory channels in its pursuit of expanding investment opportunities for digital assets.
