Executives from Grayscale, a leading crypto asset manager, recently met with the Securities and Exchange Commission (SEC) to discuss the conversion of their flagship Bitcoin trust into a spot Bitcoin exchange-traded fund (ETF).
Grayscale CEO Michael Sonnenshein, legal chief Craig Salm, ETF head Dave LaValle, and four other executives, along with representatives from the Davis Polk law firm, met with the SEC's division of trading and markets. The discussions focused on NYSE Arca's proposed rule change to list and trade shares of the Grayscale Bitcoin Trust under NYSE Arca Rule 8.201-E, according to an SEC memo.
Grayscale also revealed that it had entered into a Transfer Agency and Service Agreement with BNY Mellon, which will act as the agent for the Grayscale Bitcoin Trust. This agreement will facilitate the issuance and redemption of shares and maintain shareholder accounts.
While the meeting with the SEC has sparked speculation about the conversion of the Grayscale Bitcoin Trust to an ETF, Bloomberg ETF analyst James Seyffart believes that the agreement with BNY Mellon was always going to be required and does not necessarily indicate an imminent conversion. Seyffart also noted that the SEC's trading and markets division is responsible for approving or denying proposed rule changes.
Grayscale's Potential Dominance in the ETF Market
If the Grayscale Bitcoin Trust can be "uplisted" to NYSE Arca on the same day that other issuers launch spot Bitcoin ETFs, Grayscale has a significant opportunity to dominate this category, according to ETF Store President Nate Geraci. He believes that Grayscale, with $20 billion in assets under management, will be a strong competitor even with BlackRock in the mix.
Continued Progress and Approval Odds
Grayscale submitted a registration statement with the SEC in October, signaling its intention to list the shares of the Grayscale Bitcoin Trust on the NYSE Arca. An appellate court has also ordered the SEC to review its decision to deny Grayscale's bid for a spot ETF. Despite these developments, Seyffart remains optimistic about the approval of a Bitcoin ETF and maintains his previous prediction that there is a 90% likelihood of approval by January 10, 2024.
