TLDR:

  • Grayscale, a major crypto fund manager, urges the SEC to approve all spot Bitcoin ETFs at once, including its own.

  • Grayscale argues that selective approval would create an unfair advantage for some proposals.

  • Grayscale also challenges the SEC’s demand for surveillance sharing agreements with Coinbase, a leading crypto exchange.

Article:

Grayscale, a prominent crypto fund manager, has asked the U.S. Securities and Exchange Commission (SEC) to approve all pending spot Bitcoin ETFs together, claiming that selective approval would give an undue edge to some proposals. The request, expressed in a letter submitted by Grayscale’s Chief Legal Officer, Craig Salm, included their own application among the eight filings.

The letter suggested that the SEC could approve the spot ETFs based on precedents set for Bitcoin futures ETFs, as these fund types are closely related. Grayscale also disputed the SEC’s requirement for surveillance sharing agreements (SSAs) between the ETF providers and Coinbase, a top crypto exchange, which aims to prevent market manipulation.

Recently, ETF filings from leading financial companies, such as Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest, were updated to include SSAs with Coinbase. The SEC, in turn, had postponed the ETFs’ approval in June citing the lack of such agreements.

However, Grayscale contends that these SSAs are not necessary or adequate under SEC standards as Coinbase is not a registered securities exchange, broker-dealer, or futures exchange. Grayscale stressed that the approval of the ETFs would mark a significant but positive change in the SEC’s standard application, warning against any discriminatory ‘first-mover’ benefits to certain proposals.

The firm’s Grayscale Bitcoin Trust (GBTC) currently has nearly a million investors, tracking Bitcoin’s price. Conversion to an ETF could generate billions in investor value, making Grayscale question the SEC’s rationale in withholding GBTC investors from a spot Bitcoin ETF. The SEC rejected Grayscale’s application to convert the GBTC into a spot Bitcoin ETF last June, leading to a lawsuit by Grayscale against the regulator. Grayscale accuses the SEC of inconsistency in handling similar investment vehicles, considering it an arbitrary act.