Grayscale starts the clock on SEC decision to convert GBTC to an ETF

NYSE Arca has filed to list Grayscale's proposed bitcoin exchange-traded fund, starting the clock on a decision from the Securities and Exchange Commission (SEC).

Grayscale was said to be ramping up its efforts to convert its flagship fund, the Grayscale Bitcoin Trust (GBTC), into an ETF this July. It announced it would offload fund account and administration functions to BNY Mellon in October. At the time, CEO Michael Sonnenshein said engaging BNY Mellon was an important milestone for converting the trust.

In February, Sonnenshein told The Block during a podcast recording the firm planned to " register and uplift GBTC onto a national securities exchange as a bonafide ETF."

To that end, it has also hired David LaValle as global head of ETFs, the previous CEO of index provider at Alerian and once head of ETF capital markets at State Street. 

Grayscale has said that ETF status is the end game for its products. Earlier steps in the life cycle also include registering the funds as SEC-reporting companies, which both its bitcoin and ether funds have achieved.


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Despite the SEC's allowance of a futures-based ETF, the Commission has yet to let a spot ETF through. In previous rejections, the Commission has cited concerns of market manipulation in spot venues. The recently allowed futures ETF holds futures traded on CME, a federally-regulated exchange, which some say makes the difference.

Still, Grayscale argues that if a regulator is comfortable with a derivative, it must be comfortable with the underlying asset. 

“At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset,” said Dave LaValle, Global Head of ETFs at Grayscale Investments, in a statement.

The SEC most recently punted the decision on four applications to the end of 2021. For all applicants, it was not the first extension received. VanEck is the furthest along in the life cycle and can expect an answer by November 14. 

ProShares' bitcoin futures-based ETF began trading on the NYSE Tuesday. 

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About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.