The SEC has opened talks with Grayscale over its bid for a spot bitcoin ETF conversion: report

The Securities and Exchange Commission has opened talks with Grayscale Investments over the firm's application to convert its flagship fund into a spot bitcoin exchange-traded fund, according to a report.

Grayscale has been in contact with both the SEC's Division of Trading and Markets and the Division of Corporation Finance, following a court ruling that the agency has to re-review the firm's bid for a spot bitcoin ETF, CoinDesk reported on Wednesday, citing a person familiar with the situation.

Three judges in the U.S. Court of Appeals for the D.C. Circuit ruled in August that the SEC has to re-review Grayscale's bid for a spot bitcoin ETF after the asset management firm sued the agency last year following the rejection of its plan for the conversion of its flagship GBTC fund. The court specifically addressed the SEC's differential treatment of spot bitcoin ETFs and similar funds based on futures contracts, which the regulator has approved. 

Grayscale submitted a fresh filing a few weeks ago for the fund ahead of the court's release of a formal mandate to assert the August ruling.

'Time tested process'

SEC Chair Gary Gensler said that the agency was still reviewing the court's decision during a Senate Banking Committee hearing in September. Multiple firms have filed for spot bitcoin ETFs, including BlackRock and Fidelity. Some experts say the Grayscale court decision could tip a decision into their favor. 

Gensler also told a reporter last month that the Division of Corporation Finance gives feedback, while the Division of Trading and Markets looks at the filings. 

"This is a time tested process that goes back decades. The staff of the SEC, it's called the Disclosure Review Team, but in that group, they respond and give feedback to potential issuers," Gensler said.