Approve All Bitcoin ETFs Together, Grayscale Tells SEC

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Grayscale, the crypto asset manager, has called on the SEC to approve all spot Bitcoin ETFs simultaneously in response to recent regulatory developments. The company, including its own applications, has filed for eight Bitcoin ETFs.

Grayscale emphasizes the importance of avoiding the favoring of specific players and instead advocates for a fair approach that offers consistent guidance and feedback to all issuers. This move aims to prevent any one participant from gaining an unfair advantage in the market.

Grayscale urges SEC to ensure fairness to investors and issuers in its approval process, regardless of the method chosen – court mandate or evolution of its position about the applicant.

Approval Based on Approved Bitcoin Futures ETF

Grayscale, in its recent comment letter, suggests that the SEC could approve a spot Bitcoin ETF by drawing on the approval of the Bitcoin Futures ETF.

The company highlights the strong connection between the two markets, citing studies showing a 99% correlation.

Grayscale’s argument rests on the premise that the CME Bitcoin futures market, regulated by the CFTC and part of the Intermarket Surveillance Group, provides adequate protection against fraud or manipulation in the spot-market exchange.

This perspective demonstrates the viability of a spot Bitcoin ETF approval based on the existing framework for Bitcoin Futures ETF.

SEC

Grayscale emphasized that integrating Surveillance Sharing Agreement (SSA) with the spot Bitcoin market should not be overemphasized, as it is not a novel concept. The crypto asset manager has a track record of adhering to US financial rules and regulations.

On July 3, BlackRock submitted a revised filing for its Bitcoin ETF and listed Coinbase as its Surveillance Sharing partner, complying with the SEC’s SSA mandate.

As per the SSA agreement, exchanges and market surveillance providers must share surveillance information, including customer data and other particulars, with the regulators, in this case, the SEC.

Grayscale Now Bracing for Positive Change

Grayscale’s optimism is rising as it anticipates the SEC’s approval for its ETF applications following Ripple’s legal victory challenging the treatment of XRP as a security.

The recent push by other US regulators to curb the SEC’s power has bolstered Grayscale’s confidence, signaling potential changes in the crypto ecosystem.

The relationship between Grayscale and the SEC has been complex and contentious, starting with Grayscale’s lawsuit against the SEC in June 2022 after the rejection of its ETF application for GBTC.

However, a US court’s questioning of the SEC’s rejection in March 2023, based on prior surveillance agreements for Bitcoin Future-based ETFs, has fueled Grayscale’s hope for a favorable outcome.

Despite the SEC’s historically stringent stance on cryptocurrencies, upcoming regulatory updates, such as the US bipartisan bill aiming to establish clearer crypto regulations, have instilled confidence within the crypto community.

Grayscale remains optimistic about the prospects of its ETF applications, expecting significant implications for the industry upon approval.

According to Seeking Alpha, there is a 44% chance that Grayscale would win this case.

Related

  1. FTX Founder Sam-Bankman-Fried Must be Jailed Before Trail for Witness Tampering
  2. Coinbase CEO Asks Users to Fight For Crypto in US
  3. Crypto Lobbyists Rejoice as Congress Steps Towards Clearer Regulations

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