Grayscale files amended Bitcoin ETF filing with SEC
Grayscale has submitted an amended S-3 filing to the U.S. Securities and Exchange Commission to convert its Bitcoin trust into a spot Bitcoin exchange-traded fund with a cash redemption model, according to Bloomberg Intelligence ETF research analyst James Seyffart.
Seyffart described Grayscale’s acceptance of the agency’s cash-only creation/redemption order as “bending the knee.” It is known that BlackRock, ARK Invest, and 21 shares have shifted to this model for regulation and compliance purposes.
— James Seyffart (@JSeyff) December 26, 2023
Previously, the SEC obligated every ETF filer to submit the final amendment before December 29, adding the applicants cannot mention in-kind creation, as such references will be rejected. Grayscale reportedly had nine meetings with the SEC in the last few months before the announcement.
The cash creation and redemption model requires investors to use cash for transactions for Bitcoin holdings exchange instead of using Bitcoin, according to Bloomberg Intelligence ETF analyst Eric Balchunas.
Grayscale’s filing addressed, “The Trust is currently able to accept Cash Orders. However, similar to the other spot Bitcoin exchange-traded products, the Trust is unable to create and redeem shares via in-kind transactions with Authorized Participants.”
Additionally, the filing included a confusing change to airdrops and forks, according to finance lawyer Scott Johnson.
“Feels like this would be explained by SEC mandating this behavior, but other issuers haven’t made similar changes,” said Johnson.
Grayscale's amended S-3 gives a nice little background on the key sticking point for in-kind creation/redemption. The SEC promulgated rulemaking for digital asset safekeeping. Despite the fact that BDs and exchanges apparently believe they could comply with the rule and offer… pic.twitter.com/SdudYdsgoR
— Scott Johnsson (@SGJohnsson) December 27, 2023
Silbert resigns from Grayscale’s board of directors
The CEO of Digital Currency Group (DCG), Barry Silbert, formally resigned from the Grayscale board of directors on the same day the latter submitted the amended filing to the SEC. Accordingly, DCG’s chief financial officer Mark Shifke has been assigned to replace the position.
Silbert’s resignation could enhance Grayscale’s chances of obtaining approval for its spot Bitcoin ETF filing, as Lumida Wealth CEO Ramah Luwalia suggested. Authorities have reportedly been investigating Silbert and DCG regarding their involvement in Gemini’s Earn program, which saw DCG, along with Gemini and Genesis, sued by the SEC.
Earlier this year, Genesis creditors filed a securities class action (SCA) lawsuit against DCG and Silbert for allegedly violating federal securities laws by executing lending agreements related to securities without qualifying for an exemption from registration. It is also known that Gemini Trust Company co-founder Cameron Winklevoss intended to sue DCG and Silbert for the $900 million owed to Gemini clients.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information