Grayscale files revised application for Bitcoin spot ETF, details here

Journalist

Posted: December 27, 2023

• Grayscale agreed to the cash-only model as mandated by the SEC.
• Grayscale’s application is due for a decision on the 10th of January.

Crypto asset management firm Grayscale filed a revised S-3 filing with the U.S. Securities and Exchange Commission (SEC) to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin [BTC] ETF, according to Bloomberg research analyst James Seyffart.

UPDATE: @Grayscale just filed another amended S-3 to convert $GBTC into a #Bitcoin ETF. pic.twitter.com/TKPP9ufa9X

— James Seyffart (@JSeyff) December 26, 2023

Grayscale compromises for approval

Recall that the regulator has fixed 29th December as the deadline for submitting final changes to respective filings. Firms missing this cut-off date won’t be considered for the first wave of potential approvals in January 2024.

One of the notable aspects of the amended filing was Grayscale agreeing to the cash-only model as mandated by the SEC. Seyffart viewed this development as “bending the knee” by the world’s largest digital asset manager.

However, Grayscale was not the first to succumb to the diktat. BlackRock and ARK Invest previously made changes to their filings to comply with the cash creation and redemption model.

Understanding the conflict

For the uninitiated, SEC’s cash-only requirement means that ETF’s underlying assets could be exchanged/redeemed with a market maker only via cash transactions, as opposed to the in-kind model prevalent across stock-based ETFs.

While this helps in aligning the ETF’s share price with the underlying asset, in this case Bitcoin, it could make the share more expensive for investors.

Grayscale’s stance reflected that it was willing to compromise in order to be among the first wave of approvals.

On the whole, the company has been upbeat about its prospects ever since a court ruling in its favor in August. The court had ordered the SEC to reconsider its prior denials of Grayscale’s request to convert the trust into a spot Bitcoin ETF.

Grayscale’s application is due for a decision on the 10th of January.

How much are 1,10,100 BTCs worth today?

GBTC discount narrows

Since the legal victory, the fund’s discount to its underlying Bitcoin holdings have narrowed considerably. According to Coinglass, it dropped to 5.51% as per a recent update.

Typically, when the discount narrows, it implies that investors were having a more bullish view on GBTC. Coinglass predicted that the discount will be closed in the first quarter of 2024.

Source: Coinglass