By July 6 – less than one month away – the SEC has to make a decision on crypto asset manager, Grayscale’s, latest application to convert its bitcoin trust (GBTC) into a spot ETF.
To date, regulators have continuously denied the steady stream of spot bitcoin ETF applications on the grounds that the market doesn’t fall under a market regulator’s oversight. Regulators did however allow bitcoin futures ETFs to begin trading in October 2021.
Longtime CoinSnacks readers know that we have been covering spot bitcoin ETF applications and what an approval’s second order effects would potentially be since we first started writing this newsletter in 2017.
Simply, not only would a bitcoin ETF bring an enormous amount of eyeballs and capital into the crypto ecosystem from retail investors who may have been sitting on their hands to date, but it would also immediately close GBTC’s discount to Net Asset Value (NAV) that is currently ~30%. If approved, this means that investors in GBTC would immediately make 30% on their investment as the gap between where the trust trades today and its true value closes.
That’s why Grayscale’s recent announcement on hiring Donald B. Verrilli Jr., a former Solicitor General of the United States under the Obama administration, is such a big deal. Verrilli is one of the nation’s most experienced attorneys, having argued more than 50 cases before the Supreme Court.
Our go-to crypto lawyer, Jake Chervinsky tweeted:
“The SEC’s deadline to approve or deny the application to convert GBTC to an ETF is July 6. No doubt, it should be approved. I don’t see how the SEC survives a legal challenge if not, especially one led by Don Verrilli.”