Grayscale Urges SEC for Approval of All Spot Bitcoin ETFs

• Grayscale Exec urges the SEC to approve all spot Bitcoin ETF applications together.
• The hope may be strained with the SSA-linked to Coinbase exchange.

Asset management firm Grayscale Investments is encouraging American regulator the Securities and Exchange Commission (SEC) to simultaneously approve all the filed applications for a spot Bitcoin (BTC) Exchange Traded Fund (ETF).

Craig Salm, Grayscale’s Chief Legal Officer made a post earlier this week referring to a letter that its legal team submitted highlighting the 8 spot Bitcoin ETFs filings that the SEC has received so far.

He then urged that no favorites should be picked, instead, they should be approved at the same time, showing fairness and order. This request sounds like the most reasonable thing to do considering the fact that it would offer equal opportunities to all concerned parties and offer fairness.

Grayscale advocacy for approval also includes those “Trust whose Rule 19b-4 filings were previously disapproved after lengthy Commission consideration.” Furthermore, Salm advised that the regulator approves the funds in the same manner as BTC Futures ETFs which according to the letter are two funds types that are “inextricably linked.”

Coinbase Exchange-linked SSA May Not Please SEC

Noteworthy, many investment asset managers including Invesco, BlackRock, Valkyrie, VanEck, WisdomTree, Fidelity and ARK Invest have adopted surveillance sharing agreements (SSAs) with United States-based cryptocurrency exchange Coinbase as requested by the SEC.

They have updated their spot Bitcoin ETF applications with the securities watchdog to include their SSAs.

The addition of an SSA makes it easier for the SEC to monitor the market effectively and avoid manipulation as well as other irregular trading activities. However, Grayscale believes that the regulator would not be pleased with the agreement with Coinbase as the crypto firm is not registered as a securities exchange or broker-dealer with the commission as was recently reported nor with the Commodity Futures Trading Commission (CFTC) as a futures exchange.

In June when the American regulator filed a lawsuit against Coinbase, a few hours after leading cryptocurrency exchange Binance was equally sued, it was said that the digital asset service provider was operating as an unregistered broker and exchange operator, therefore, violating regulatory requirements. With the lawsuit still pending, it is not certain that the SEC would be receptive toward Bitcoin ETF applications related to Coinbase.

Still, Salm believes that approving a spot Bitcoin ETF would be “a positive but sudden and significant change” for the SEC and it would “improperly grant an unfairly discriminatory and prejudicial first-mover advantage to these proposals.”

Grayscale was once a victim of the SEC’s spot Bitcoin ETF rejection and this pushed the firm to take a legal recourse against the regulator.

After the SEC rejected Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) to an ETF on the premise that there was not enough information on how the Grayscale spot ETF would protect investors from “fraudulent and manipulative acts and practices”, Grayscale Chief Executive Officer (CEO) Michael Sonnenshein responded with legal action.

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