Grayscale Demands Revision of BlackRock's Application for Bitcoin Spot ETF
Date: 2023-07-29 Author: Karina Ziganova Categories: BLOCKCHAIN, CRYPTO PAYMENTS
Grayscale Challenges U.S. Securities and Exchange Commission's (SEC) Decision to Review Blackrock's Application for Spot Bitcoin ETF
Cryptocurrency asset manager Grayscale Investments has sent a letter to the US Securities and Exchange Commission (SEC) stating that BlackRock's application for a spot bitcoin ETF should not be approved in accordance with the precedent.
The letter argues that the regulator must approve any spot exchange-traded products (ETPs) consistently and impartially. Grayscale also noted that the inclusion of a joint surveillance agreement with Coinbase is not sufficiently different from previously rejected applications.
Grayscale Demands Bitcoin Trust to Be Converted to Spot ETF
Grayscale manages the Grayscale Bitcoin Trust (GBTC), which provides direct trust management of Bitcoin. Initially, it applied for a GBTC listing to trade on the NYSE Arca exchange, but in 2022 the SEC rejected this decision. Now the company is challenging it in court.
Over the past month, a number of asset managers, including BlackRock, VanEck and WisdomTree, have submitted updated applications for spot bitcoin ETFs to the Commission, which mention joint surveillance agreements with cryptocurrency exchange Coinbase. Some experts believe that this will be a key factor that will lead to the approval of ETFs.
However, Grayscale thinks otherwise. Representatives of the company recalled that the SEC had previously indicated that joint surveillance with such an unregulated trading platform as Coinbase does not in itself satisfy the criteria for approving an ETF. Therefore, if the regulator changes its course on the basis of agreements with the crypto exchange, this will mean an inconsistent change in policy.
"As the Commission is aware, the possibility of entering into a joint surveillance agreement between a listed exchange and a bitcoin spot trading venue is not a new idea. Grayscale discussed the possibility of such an approach with Commission staff back in 2019," the company said in a letter.
Grayscale argues that if the SEC is ready to consider the agreements with Coinbase as relevant, then it should allow changes to previously rejected applications to be made to include similar clauses. Representatives of the company also believe that the Commission is obliged to approve all spot bitcoin ETFs at the same time in order to avoid unfair discrimination between issuers and satisfy the principles of investor protection.
Grayscale's letter illustrates that the status of bitcoin ETFs in the U.S. is still complex and controversial, with regulators and industry participants interpreting political signals in vastly different ways.
