Grayscale has renewed its months-long effort to convince the Securities and Exchange Commission (SEC) to approve the conversion of its $40 billion Bitcoin Trust into an exchange-traded fund (ETF).
ETFs combine securities such as stocks or commodities and allow investors to buy shares of these packages without directly owning the underlying assets. There are two main types of bitcoin ETFs: bitcoin futures (derivative contracts that speculate on the price of the cryptocurrency) and bitcoin spots (which trade based on the current price of bitcoin).
Grayscale aims to launch the latter, a bitcoin spot ETF. It would be the first of its kind, although the SEC has approved four bitcoin futures ETFs to date, it has not approved any bitcoin spot ETFs.
In a letter sent to the SEC last week, which was also touched upon by the Financial Times, Grayscale’s lawyers argued that the way the regulatory agency approved the fourth bitcoin futures ETF, Teucrium, earlier this month, opened the door for a bitcoin spot ETF.
Grayscale’s lawyers argued that the first three bitcoin futures ETFs were approved by the SEC under the Investment Company Act of 1940. However, the Teucrium ETF was approved under the Securities Act of 1933, the first. The SEC has previously stated that the 1940 Act provided certain investor protections that were not covered by the 1933 Act. The implication is that since bitcoin spot ETFs could not be submitted under the 1940 Act, they offered insufficient investor protection.
