#crypto fund manager Grayscale is requesting the Securities and Exchange Commission (#SEC ) to approve all proposed spot #bitcoin exchange-traded funds (ETFs) simultaneously to promote fair competition. The company believes that no single ETF should have an unfair advantage over the others.
Grayscale's Position on #ETF Approval
In a recent post, Grayscale Chief Legal Officer Craig Salm stated that the firm's legal team submitted a letter concerning eight spot Bitcoin ETF filings — Grayscale's included. They argued that the SEC should avoid picking "winners and losers" and strive to make fair and orderly decisions.
The SEC's Standards & Grayscale's Argument
Grayscale asserts that the SEC could approve spot ETFs based on previous approvals for Bitcoin futures ETFs, noting the two types of funds are "inextricably linked".
In addition to this, Grayscale has raised questions about the recent surveillance sharing agreements (SSAs) between Coinbase and the spot ETF providers. They argue that these SSAs:
Are not a new concept
Do not meet the SEC’s standards
Prominent ETF filings from Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest have recently been updated to include SSAs with Coinbase.
The Role of Surveillance Sharing Agreements
The purpose of these SSAs is for Coinbase to share trading books and other information with the SEC. This will allow the commission to monitor potential market manipulation or irregular trading activity. However, Grayscale argues that these SSAs would neither satisfy nor be necessary under the SEC's standards.
This is because Coinbase isn’t registered with the SEC as a securities exchange or broker-dealer, nor with the Commodity Futures Trading Commission as a futures exchange.
Grayscale has voiced concerns that approving the ETFs would lead to a "sudden and significant change" in the SEC's application of its standard, which may in turn "improperly grant an unfairly discriminatory and prejudicial first-mover advantage to these proposals".
The Implication for Grayscale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Trust (GBTC) aims to track Bitcoin's price and currently has nearly 1 million investors, according to Salm. Converting GBTC to an ETF would return billions in value to investors. Therefore, Salm argues there's "simply no reason" for the SEC to prevent GBTC investors from a spot Bitcoin ETF.
Unfortunately, the SEC denied Grayscale’s application to convert the GBTC to a spot Bitcoin ETF last June, prompting Grayscale to sue the regulator for inconsistent treatment of similar investment vehicles.
In conclusion, Grayscale is making a case for fairness in the SEC's approval process of Bitcoin ETFs, arguing that no single fund should gain an unfair first-mover advantage.
