Grayscale requests equal treatment for all Spot Bitcoin ETFs in letter to SEC

Grayscale requests equal treatment for all Spot Bitcoin ETFs in letter to SEC

The Blockchain Industry: A Call for Fairness and Approval Simultaneously

The blockchain industry has been experiencing a surge of interest and innovation in recent years. One of the most highly anticipated developments is the approval of bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). Grayscale Investments, a leading digital currency asset manager, has recently voiced its concerns regarding the fairness of the approval process.

Grayscale Investments has urged the SEC to approve all spot bitcoin ETF applications simultaneously, rather than approving only a few. According to Grayscale, granting approval to only a select few would create an unfair advantage for those applications. In a statement to the SEC, the company emphasized the need for equal treatment of all applicants.

The statement also raised questions about whether the listed proposals’ surveillance-sharing agreement with cryptocurrency exchange Coinbase would meet the SEC’s requirements. Grayscale expressed its belief that such agreements should be made with market venues that have mandatory investigative authority and comprehensive oversight from a market regulator. Without these features, the agreements may not satisfy the statutory standards outlined in Section 6(b)(5).

It is noteworthy that Grayscale has been embroiled in a legal battle with the SEC to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. While the SEC has approved several futures-based bitcoin ETFs, Grayscale’s application for conversion has been denied. In response, Grayscale filed a lawsuit against the SEC, seeking approval for the conversion.

Grayscale manages the world’s largest bitcoin fund, GBTC, which allows institutional investors to gain exposure to bitcoin without directly holding the asset. In the past, GBTC has traded at a significant discount to the underlying value of bitcoin. However, the discount has recently narrowed following BlackRock’s application for a bitcoin spot ETF.

The recent influx of spot bitcoin ETF applications from prominent institutions like BlackRock and VanEck has added further complexity to the approval process. Grayscale argues that an approval that promotes investor protection and fairness for issuers should be granted simultaneously with the approval of all proposed spot bitcoin ETFs. This includes applications that were previously disapproved, signaling the need for consistency in the SEC’s decision-making process.

Grayscale’s Chief Legal Officer Craig Salm emphasized that introducing a surveillance-sharing agreement with a spot bitcoin market should not be considered a “silver bullet” for gaining approval. Instead, the approval process should be fair and orderly, taking into account the principles of investor protection and market fairness.

In conclusion, the blockchain industry eagerly awaits the SEC’s decision on bitcoin ETFs. Grayscale Investments has called for fairness in the approval process by urging the SEC to approve all applications simultaneously. This approach would prevent any unfair advantages and ensure equal treatment of all applicants. As the industry evolves, it is crucial for regulatory agencies to strike a balance between innovation and investor protection.

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