Yesterday, Grayscale submitted its updated request to the SEC for the issuance of a Bitcoin spot ETF.
This is most likely the final version, the one that should be judged by the SEC itself.
Summary
The Grayscale Bitcoin spot ETF
The Grayscale Bitcoin spot ETF would not be a new ETF created from scratch, like for other applicants, but the transformation of the current Grayscale Bitcoin Trust (GBTC) into an ETF.
GBTC has been around for years, so much so that its AUM (Asset Under Management) is already over $27 billion.
A total of almost 700 million GBTC shares have already been issued on the market, each corresponding to an AUM of 0.00089459 BTC. In total, GBTC already owns almost 620,000 Bitcoin.
Currently, however, not only can GBTC shares only be traded OTC and are not listed on traditional exchanges, but they are also not redeemable. In fact, during 2022 their value has dropped much more than the price of BTC, resulting in a negative discrepancy of almost 50% (the so-called NAV discount).
Instead, by transforming into a real ETF, it will first of all be freely tradable on stock exchanges, and furthermore it will allow the owners of its shares to also return them, if they wish, in exchange for BTC.
The company has also published FAQs for current shareholders, and for any potential new investors interested, which explain in detail how their Bitcoin spot ETF will work.
Grayscale’s request to convert GBTC into a Bitcoin spot ETF
Grayscale requested the conversion of its GBTC into an ETF last year, but the SEC refused to approve it.
The company later sued the SEC, and won. Therefore, there is a court ruling that confirms that the SEC was wrong to reject that request.
Furthermore, the SEC could have also appealed against that ruling, but it did not. Now the deadline to file it has expired, so in fact the SEC has accepted that ruling.
Grayscale has therefore submitted another request in this regard this year, which at this point should theoretically be approved.
The SEC would still have time to pronounce its judgment in this regard, but the context will probably lead it to express itself shortly.
In fact, the agency seems intent on approving all requests for the issuance of ETFs on Bitcoin spot in the USA at the same time.
Theoretically, it should be done by January 10th, in case Ark’s request is approvable, since the latter actually expires on that date.
However, the hypothesis that is circulating is that the approval will arrive today itself, after the closing of the US stock exchanges for the weekend.
The market launch
The Chief Legal Officer of Grayscale stated yesterday that they are “filling out some forms”.
It did not refer to the official request sent to the SEC, because the final form of the request had already been sent.
The hypothesis is that it referred to modules related to the actual market entry of the shares of the new ETF that will replace GBTC. It should be remembered, in fact, that it will be the same shares already currently held by GBTC investors that will be put on the market, if they so choose, simply in a different form.
In fact, the same CEO of Grayscale has stated that he believes the SEC will approve all similar requests together, confirming the hypothesis that the news of the approval may come out perhaps as early as tonight.
This means that Grayscale is likely preparing to launch its Bitcoin spot ETF on the market as early as Monday.
The CEO has also stated that a key moment has been reached for Bitcoin spot ETFs, implicitly and indirectly suggesting that the SEC can now do nothing but approve them.
Moreover, yesterday the final requests were also submitted by almost all the other applicants, so the SEC may already have all the necessary material to proceed with the mass approval of all the requests in this regard.
Specifically, GBTC should be listed on the NYSE Arca.
The impact on the price of Bitcoin
This night the price of Bitcoin briefly dropped below $43,000.
However, he did it shortly after the negative opening of the Asian stock markets, so it is likely that that rapid decline was due to what was happening at that time in the Asian markets.
The news of the approval of Bitcoin spot ETFs in the USA seems to have already been widely priced in by the markets, to the point that it is not absurd to imagine that once officialized, it could trigger a “sell the news” that could cause the price of Bitcoin to drop.
To tell the truth, already the day before yesterday the price of Bitcoin tried to go down, but that drop was triggered by the false news of the possible postponement of the SEC’s decision on ETFs.
If in theory the news could cause the price of Bitcoin to drop in the short term, things could go differently in the medium to long term.
First of all, if the ETFs on Bitcoin spot were really already available and tradable on US exchanges, this could spread some confidence.
If they were then successful in attracting many new investors and generating high trading volumes, the effect on sentiment could be significant.
At that point, it would be reasonable to imagine a further increase in the price of GTC, although this is currently only a hypothetical scenario with no certainty.
If in the coming months they were able to attract huge capital that has so far been distant from the crypto markets, the impact on the price could also be very significant.
