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Grayscales Files Updated Spot Bitcoin ETF Application with US SEC after Binance’s Forced Exit

Summary:
Grayscale officials had previously met with the US SEC representatives to the division of trading and markets to discuss the proposed rule to list and trade GBTC under NYSE Arca. After the United States Department of Treasury purged Binance Holdings Ltd’s operations in the country, the pathway for spot Bitcoin exchange-traded funds (ETFs) was clear. Around the same time, Grayscale Investments, a digital asset management company owned by Digital Currency Group (DCG), was preparing to update its application with the US SEC.  According to a memo from the US SEC, several of Grayscale’s top executives led by Chief Executive Officer Michael Sonnenshein met with the agency on November 20 to discuss the necessary changes needed on the original filing to ensure the approval of the application.

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Grayscale officials had previously met with the US SEC representatives to the division of trading and markets to discuss the proposed rule to list and trade GBTC under NYSE Arca.

After the United States Department of Treasury purged Binance Holdings Ltd’s operations in the country, the pathway for spot Bitcoin exchange-traded funds (ETFs) was clear. Around the same time, Grayscale Investments, a digital asset management company owned by Digital Currency Group (DCG), was preparing to update its application with the US SEC.  According to a memo from the US SEC, several of Grayscale’s top executives led by Chief Executive Officer Michael Sonnenshein met with the agency on November 20 to discuss the necessary changes needed on the original filing to ensure the approval of the application. Two days after the meeting, Grayscale Investments filed an updated application with the US SEC to convert its Grayscale Bitcoin Trust (OTC: GBTC) to a spot Bitcoin ETF.

Closer Look at the Grayscale Bitcoin Trust

Grayscale Investment is one of the early adopters of Bitcoin, whereby the GBTC was created on September 25, 2013, and incorporated under the OTC rules two years later. The GBTC, which currently tracks the CoinDesk Bitcoin Price Index (XBX), has a total assets under management (AUM) of about $23.3 billion, with about 692,370,100 outstanding shares. When the US SEC gets to approve Grayscale’s application for spot Bitcoin ETF, the company noted in the updated filing that the shares of the trust will be divided into 100 baskets, which consist of about 8.967 BTC for easier redemption.

With the updated application, Grayscale Investments noted that it will be working with the Bank of New York Mellon Corp. (NYSE: BK) as the transfer agent, while the Delaware Trust Company will be the official trustee and Coinbase Custody Trust will act as the custodian of the trust. Meanwhile, Grayscale noted that it intends to list its spot Bitcoin ETF on the NYSE Arca Inc.

The move by Grayscale to list its GBTC for public trading is expected to help improve Bitcoin liquidity as more traditional investors will be involved. Moreover, the company’s spot Bitcoin ETF will mean investors do not need to directly hold Bitcoin although the shares represent the flagship value. As a result, investors will not have to worry about the storage of the actual assets, thus reducing the technical risk involved in holding Bitcoin directly.

Market Implications

While the imminent approval of spot Bitcoin ETFs in the United States is expected to bring in more cash flow to the crypto market, some analysts have warned that the GBTC approval could mean more dumping to the secondary market. Nonetheless, the demand for the mother coin is expected to grow exponentially and over time surpass that of gold as more countries adopt it to hedge against rising inflation.

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