- Grayscale’s most recent amendment to its Bitcoin ETF application has been made public.
- An expert has poked holes at critical omissions in the filing.
- Another expert suggests that highlighted omissions may not stand in the way of a potential approval of Grayscale’s Bitcoin ETF application.
As the January 10 deadline for the U.S. SEC to decide on spot Bitcoin ETF applications approaches, several firms appear to be dotting their i (s) and crossing their t (s) in recent filings to address lingering regulatory concerns and clear potential approval hurdles. Among these firms is Grayscale, which recently filed an amendment to its application to convert its Bitcoin Trust (GBTC) to a spot ETF product.
Grayscale’s recent filing has elicited reactions from experts who contend that the firm’s application still leaves several questions unanswered.
Grayscale Questioned for Refusing to List Authorized Participants
Responding to Grayscale’s amended S-3 filing dated December 29, in an X post on Tuesday, January 2, Senior Bloomberg ETF Analyst Eric Balchunas noted that the amended filing only stated more clearly Grayscale’s plan to use a cash-only creation and redemption model for its proposed ETF. The analyst poked holes at the firm’s refusal to list authorized participants and disclose its planned fee.
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"Still no AP named, just blanks where name should go. Not sure why since SEC wants to see it and they have been pretty cocksure about having one. Also, nothing on fee (that I could see). That's big open q too," he wrote.
As highlighted by Balchunas, Grayscale CEO Michael Sonnenshein had recently asserted that the firm has had authorized participants lined up since 2017. However, the authorized participants in question, Credit Suisse and KCG Americas, were named for the firm’s Bitcoin trust, not its proposed ETF. The firm had also announced agreements with Virtu and Jane Street in June 2022, but these firms were also not listed as authorized participants in the updated filing.
Balchunas contends that the absence of any names in the official filing raises questions. “It isn’t in doc yet (which SEC wants) and until we see we aren’t counting any horse as official,” he wrote in a separate X post.
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The analyst’s observation has sparked uncertainty over whether Grayscale will be part of the anticipated batch of Bitcoin ETF approvals expected on or before January 10, as firms like BlackRock and Fidelity have already updated their filings to include authorized participants. However, another expert suggests that these fears may be unfounded.
Lack of Authorized Participants Not A Deal Breaker?
Commenting on Grayscale’s failure to list authorized participants at this stage, Van Buren Capital General Partner Scott Johnsson asserted that it should not be a basis for denying the firm’s application. Still, he noted that Grayscale would eventually need to include authorized participants at some point to complete the registration and make it effective.
Authorized participants serve as brokers for ETFs, purchasing the fund’s underlying asset on the issuer’s behalf. In this case, authorized participants would buy Bitcoin on behalf of Grayscale’s proposed ETF.
Grayscale did not return a DailyCoin request for comment at the time of writing.
On the Flipside
- Grayscale CEO Michael Sonnenshein recently stoked excitement by posting “big work week.”
- DCG CEO Barry Silbert recently resigned from Grayscale’s board in a move many tipped to help bolster the chances of the SEC approving the firm’s ETF application.
Why This Matters
Grayscale is widely regarded as the world’s largest crypto asset manager. Approving the firm’s Bitcoin ETF application would be a boon to investors in its trust who have seen their shares trade at a discount for an extended period. However, if the SEC delays the firm’s application and accepts others, it could be a significant blow as investors may lose patience and seek more efficient Bitcoin exposure elsewhere.
Read this for more on Grayscale’s Bitcoin ETF bid:
Grayscale and Hashdex Intensify Bitcoin ETF Approval Efforts
Find out what analysts are saying about Bitcoin’s prospects in January 2024:
Bitcoin’s Surge Past $45K Fuels $50K Price Predictions
