Grayscale presses SEC to greenlight BTC spot ETF

Digital currency asset manager Grayscale Investments is awaiting the go-ahead to launch an exchange-traded fund (ETF) to convert its crypto investment firm’s $40bn bitcoin (BTC) trust.

ETF bundle securities allow buyers and investors to obtain shares without owning the assets first. A BTC ETF also gives buyers a chance to gain exposure to BTC’s price prior to buying currency.

There are two types of BTC EFTs, BTC futures, a legal contract to buy or sell BTC in the future, and BTC spots, the process of buying and selling BTC at its current price.

Grayscale is hoping to secure a BTC spot ETF. However, it seems he Securities and Exchange Commission (SEC) has yet to approve any spot BTC EFTs but has given the green light to four BTC futures EFTs.

According to a letter sent to the SEC, cited by the Financial Times, Grayscale attorneys have really pushed for the approval of a BTC spot EFT.

The argument has been posed that the SEC had approved the first three BTC futures EFTs under the Investment Company Act of 1940, and the fourth ‘The Teucrium EFT’ was approved under the Securities Act of 1933.

A previous statement was bought up from the SEC stating that the 1940 act offered important investor protections and was in fact not covered by the 1933 act. Thus, showing that BTC spot EFTs offered insufficient investor protection.

In a statement, Grayscale attorneys used Teucrium’s approval under the 1933 act as leverage, saying: “We believe the Teucrium order confirms the fundamental point … [that] when it comes to approving [exchange traded products], there is no basis for treating spot bitcoin products differently from bitcoin futures products.”

A decision from the SEC on Grayscales application is expected by July. However, Grayscale CEO Michael Sonnenshein told Bloomberg he would consider suing the SEC if the bid is rejected.

Shortly after the decision on the Teucrium, based on the differences between BTC futures EFTs and BTC spot EFTs, Sonnenshein tweeted that he “can no longer justifiably cite the ’40 act as being the differentiating factor”.

Recently, Australia followed in Canada’s footsteps and obtained direct access to BTC and Ethereum ETFs.

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Updated: 04/26/2022 — 15:00