Grayscale’s Appeal Of SEC’s Bitcoin ETF Decision To Begin Sooner Than Expected

By Kevin • January 25, 2023 9:38 pm • Comments

Previously, crypto asset manager Grayscale had made an appeal against the SEC’s decision to deny its proposal of a spot Bitcoin ETF.

This was not the first time that a Bitcoin ETF proposal was denied and Grayscale had made the announcement that it would pursue all legal options.

So far, it was just announced that the discussion of the decision will now start to take place on March 7 which happens to be much quicker than expected.

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This comes as positive news for many investors as many had expected that an appeal against the SEC’s decision would likely take a very length amount of time.

As a result, many were not optimistic that a spot Bitcoin ETF would get approved any time soon.

However, with discussions starting as early as May, it may be possible to hopefully see an approval within the next 2 years.

 

CoinDesk reports:

The arguments will take place at 9:30 a.m. ET on March 7, which is sooner than Grayscale had anticipated.

In a tweet on Tuesday, Grayscale said that “we previously anticipated oral arguments to be as soon as Q2 2023, so having them scheduled to begin on March 7 is welcome news.”
Separately, Grayscale CEO Michael Sonnenshein, reiterated on CNBC on Tuesday that the company would consider making a tender offer to redeem shares of the trust if it runs out of options to convert the trust into an ETF.

“If we do exhaust all the judicial options to challenge the SEC stance on this product, we would entertain working constructively with regulators and shareholders to offer a tender offer,” Sonnenshein told CNBC.
Sonnenshein did not disclose details of the potential tender offer, but in a letter to shareholders in December, Grayscale noted that one option is to tender an offer for up to 20% of outstanding GBTC shares.

Many are curious to see what arguments the SEC will use in order to support its denial of the spot ETF.

Grayscale had already commented on the SEC’s logic and had revealed that the logic the agency used actually contradicted itself.

This is because the SEC had allowed for the approval of future based Bitcoin ETFs, but somehow that same logic did not apply for spot ETFs.

Institutional investors still see this as one of the major obstacles that is preventing new capital to enter the crypto markets as ETFs make the market much more convenient to access as they are regulated financial instruments used by the largest fund managers in the world.

On the other hand, spot ETFs have already been approved in regions outside of the US so it is essential that one is approved in the US soon in order to catch up.

CNBC concludes:

Still, crypto investors are longing to see the SEC approve a U.S. spot bitcoin
ETF – and no longer just as a way to open the crypto market to more institutional investment.

Investors have grown concerned about the harm GBTC could do to shareholders. The shares have been trading at a growing discount to net asset value (currently about 40%) and the structure of the trust is such that shares can’t be redeemed. Many agree that the SEC giving the green light to Grayscale to convert the trust into an ETF would be the ideal path forward for investors.

GBTC, which had $14.5 billion in assets under management as of Monday, was the first crypto product investors could trade in their brokerage accounts to get exposure to bitcoin.

It was launched in 2013, well before the approval of bitcoin ETFs in Canada or bitcoin futures ETFs in the U.S.

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