Grayscale Files Amended Bitcoin ETF Application: What You Need to Know

Grayscale Submits Amendment to Registration Statement With US Securities and Exchange Commission (SEC)

Grayscale changes Bitcoin ETF request, excludes participant info.

Source: 24K-Production / Adobe Stock

Cryptocurrency asset management firm Grayscale has recently filed an amendment to its registration statement with the U.S. Securities and Exchange Commission (SEC) in its pursuit of launching a Bitcoin exchange-traded fund (ETF). While the filing lacks some details, it does provide valuable information about Grayscale’s strategy and future prospects. In this article, we’ll dive deeper into the filing, analyze the implications, and address some of the questions you might have.

Amendment No. 3: What’s New?

The filed amendment, labeled “amendment no. 3,” primarily involves submitting certain exhibits and does not modify any provisions in the prospectus that form part of the registration statement. However, it does shed light on Grayscale’s cash-creating strategy, which aligns with the SEC’s requirements for ETF issuers. Instead of dealing with Bitcoin directly, Grayscale will only transact in cash by receiving and paying out cash in exchange for shares in the fund. This approach aims to facilitate the buying and holding of spot Bitcoin without involving customer transactions in Bitcoin itself.

Missing Authorized Participant Details: A Cause for Concern?

One glaring omission in the filing is the absence of named authorized participants (AP) for the conversion of Grayscale Bitcoin Trust (GBTC) to an ETF. Authorized participants are typically the first to purchase and trade shares. While Grayscale’s CEO, Michael Sonnenshein, has previously mentioned having an AP lined up since 2017, not disclosing the specific entity in the latest filing raises questions about potential impacts on SEC approval.

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The Bitcoin ETF Race: Competitors Listing Authorized Participants

Grayscale’s hesitance to name authorized participants stands in contrast to other contenders in the Bitcoin ETF race. Companies like Fidelity, WisdomTree, and Invesco Galaxy, which filed updated Form S-1 applications, all listed their authorized participants. Invesco Galaxy selected Virtu and JPMorgan, while WisdomTree and Fidelity named Jane Street Capital. This detailed disclosure puts Grayscale’s decision under scrutiny, as the SEC generally expects such information to be included in ETF filings. Furthermore, the filing lacked information about fees, adding to the uncertainties surrounding Grayscale’s application.

Insights into the SEC’s Verdict and Grayscale’s Potential Developments

The SEC has set a deadline of January 10 to deliver its decision on recent Bitcoin ETF filings. Industry experts speculate that the SEC might respond to applicants by the end of the first week of 2024. The approval of a Bitcoin ETF holds immense significance for the cryptocurrency market, influencing market participation and investment. Grayscale’s CEO, Michael Sonnenshein, recently alluded to a “big work week,” suggesting significant developments in the crypto market. Analysts interpret this statement as a possible anticipation of SEC communication with Bitcoin ETF issuers as early as January 6.

Grayscale’s Evolution: A Move Toward SEC Compliance

Earlier, Grayscale made headlines when it amended its filing to convert the GBTC fund into a spot Bitcoin ETF after its chairman, Barry Silbert, departed. This move is seen as Grayscale accepting the SEC’s requirement for cash-only orders. The conversion to an ETF could potentially lower fees and increase liquidity for investors, as the GBTC has historically traded at a premium or discount, affecting its tracking efficiency of Bitcoin’s price. Grayscale’s GBTC currently manages $26 billion in assets under management (AUM) with a 2% management fee.

Q&A: All Your Burning Questions Answered

Q: Why did Grayscale omit the authorized participant details, and how might this affect SEC approval? Grayscale’s decision to leave out authorized participant names raises concerns as the SEC generally expects such information in ETF filings. The omission could potentially impact SEC approval, especially when competitors have disclosed their authorized participants.

Q: What is an authorized participant (AP) in the context of Bitcoin ETFs? Authorized participants play a key role in the creation and redemption of shares in an ETF. They are usually the first to purchase and trade shares, facilitating liquidity in the market.

Q: When can we expect the SEC’s decision on Bitcoin ETF applications? The SEC has set a deadline of January 10 for their decision, with industry experts speculating that responses may come by the end of the first week of 2024.

Q: What are the implications of a Bitcoin ETF approval? If approved, a Bitcoin ETF would have far-reaching implications, increasing market participation and opening up new avenues for investment in the cryptocurrency space.

Outlook and Recommendations

As the race for the first U.S. Bitcoin ETF intensifies, companies like Grayscale are striving to meet the SEC’s requirements and gain approval. Despite the omission of authorized participant details, Grayscale’s cash-creating strategy aligns with regulatory expectations, and it remains a strong contender. Investors and enthusiasts eagerly await the SEC’s decision, as a positive verdict could shape the future of cryptocurrency investments.

In conclusion, Grayscale’s amended filing provides valuable insights into its Bitcoin ETF application and approach to compliance. While uncertainties exist, the potential approval of a Bitcoin ETF could revolutionize the cryptocurrency market. Stay tuned for updates and remember to share this article with fellow crypto enthusiasts!

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References:

1. Eric Balchunas on Twitter
2. Bitcoin Erases Recovery as Miners Cash In: 3000 BTC
3. Bitcoin Spotlight ETF: Bitwise Closes Ranks With $200 Million Seed Fund
4. Bitcoin ETF Countdown: SEC’s Decisive December Deadline – Here’s the Latest
5. Michael Sonnenshein on Twitter

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