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RRUPDATES📍: Grayscale Takes W Over SEC👨⚖️
The Appeals Court rules that the SEC must review Grayscale's ETF bid.
The R Roundup
August 29, 2023
RRUPDATES📍: Grayscale Takes W Over SEC👨⚖️
The Appeals Court rules that the SEC must review Grayscale's ETF bid.
The SEC was required by a federal appeals court to "vacate" its decision to deny the trust issuer's request to turn the Grayscale Bitcoin Trust into an exchange-traded fund.
A federal judge recently decided that the U.S. Securities and Exchange Commission (SEC) must examine its denial of Grayscale Investments' application to convert the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). As a result, the U.S. may soon have its first spot bitcoin ETF.
The largest cryptocurrency fund in the world, managed by Grayscale Investments, first requested in October 2021 that its GBTC closed-end fund be transformed into an exchange traded fund.
The SEC denied the application, noting in its conclusion that it did not address the SEC's queries regarding countering market manipulation and other issues. Almost immediately after the SEC denied Grayscale's application, Grayscale filed an appeal. In the document, Grayscale requested that the SEC's order be reviewed by the United States Court of Appeals for the District of Columbia Circuit.
The court's ruling follows a flurry of applications for spot bitcoin ETFs from major institutions, with asset management BlackRock submitting its application in June. With BlackRock's application, there was a great deal of hope that a spot bitcoin ETF may be approved. Since February 2021, the Grayscale product has traded at a discount to the underlying asset. After the SEC restated its justifications for rejecting Grayscale's application to convert the trust into an ETF in December, the discount increased to a record 50%. However, after major names submitted applications for bitcoin spot ETFs, GBTC's discount shrank to levels of about 25%, the least since early 2022.
Since ETFs often trade close to their fair value, market observers have long predicted that the change from a closed-end fund to an ETF will likely completely eliminate the discount of GBTC.
With a few exceptions, the fund's structure will mostly remain same.
Since news broke $BTC is on the rise with sentiment creeping back up.
As a reminder, this is not a trading signal or investment advice; it is an opinion, and each trader/investor should know and understand the risks of trading cryptocurrencies.
This should not be regarded as financial advice; feel free to familiarise yourself with our NFA disclaimer.
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