The potential approval of a Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC) has sparked widespread discussion. Grayscale has ultimately agreed to adopt the SEC-preferred cash creation/redemption process to convert its Bitcoin Trust Fund (GBTC) into a Bitcoin spot ETF. Meanwhile, Barry Silbert, the founder of Digital Currency Group, the parent company of Grayscale, has stepped down from his position as a director at Grayscale amidst legal disputes. Market analysts speculate that this move may be a strategic measure to increase the chances of ETF approval.
Grayscale CEO Steps Down as Director at Grayscale
GBTC Discount Narrows to -5.51%
Hashdex Meets with SEC Chairman’s Office Staff
Recently, Bloomberg ETF analyst Eric Balchunas commented that the approval of a Bitcoin spot ETF relies primarily on two key factors: adhering to the SEC-preferred cash creation/redemption process and confirming underwriter information.
Initially, while other issuers compromised and adopted the cash process, Grayscale insisted on using the physical process when converting its Bitcoin Trust Fund (GBTC) into a Bitcoin spot ETF. However, today, Bloomberg ETF analyst James Seyffart pointed out that Grayscale indicated in its amended S-3 filing that they have ultimately accepted the cash process.
In response, Scott Johnsson, General Partner at VB Capital, stated that although the SEC claims this is to protect investors, the cash process may pose greater risks for investors looking to invest in Bitcoin through spot ETFs. He commented:
It is understood that the SEC’s decision to prevent brokers from directly handling Bitcoin is an attempt to better track Bitcoin transfers from exchanges and mitigate any potential risks related to anti-money laundering or KYC compliance.
It is worth mentioning that concurrently, Barry Silbert, the founder and CEO of Digital Currency Group, which is embroiled in legal disputes, announced his resignation as a director at Grayscale, with Mark Shifke, CFO of DCG, succeeding him.
Market analysts speculate that Silbert’s departure may significantly increase the likelihood of Grayscale successfully converting GBTC into a Bitcoin spot ETF. Ramah Luwalia, CEO of Lumida Wealth, commented that Silbert’s resignation is likely voluntary, given the SEC’s ongoing investigation into Silbert and DCG, in order to improve the chances of ETF approval.
Latest Coinglass data shows that the GBTC discount has significantly narrowed from -48.89% at the end of last year to -5.51%, the lowest level since May 2021, indicating increased market confidence in its transformation into a spot ETF.
Meanwhile, the price of GBTC on the secondary market continues to rise, with a growth of over 22% in the past month, reaching a current trading price of $35.65 per share.
Regarding the latest developments for other spot ETF applicants, James Seyffart noted that Hashdex recently held another meeting with the U.S. Securities and Exchange Commission (SEC). Unlike previous meetings primarily with “Trading and Markets” or “Corporate Finance” department personnel, this meeting specifically involved staff from SEC Chairman Gary Gensler’s office, perhaps indicating a heightened level of importance placed on the progress of ETF applications.
Source: Coinglass