SEC in Talks with Grayscale Investments over Bitcoin ETF Push

While the crypto community eagerly awaits the SEC’s decision regarding Grayscale’s ETF application and others, SEC Chair Gary Gensler remains cautious in sharing specific details about the commission’s next steps.

The US Securities and Exchange Commission (SEC) is reportedly in discussions with Grayscale Investments regarding the conversion of the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin Exchange-Traded Fund (ETF). 

Grayscale’s Ongoing Talks with the SEC

The talks between Grayscale and the SEC are shrouded in confidentiality, but they signify a critical phase in the potential transformation of the crypto industry. 

According to an anonymous source familiar with the discussions, Grayscale has been in contact with both the SEC’s Division of Trading and Markets and the Division of Corporation Finance since winning its court battle. These two SEC divisions will play significant roles in shaping and ultimately approving the firm’s ETF application.

This development comes after the SEC held a closed-door meeting on November 2 to discuss settlement claims, administrative proceedings, litigation claim resolution, and examination and enforcement proceedings. The SEC’s current flexibility might have been bolstered by these meetings.

Grayscale’s Chief Legal Officer, Craig Salm, acknowledged the ongoing engagement with the SEC, though he refrained from divulging specific details about the discussions. “Right now we’re just laser-focused on constructively re-engaging with Trading and Markets,” Salm stated. 

He also noted that while there are still details to be worked out, it seems that other applicants for Bitcoin ETFs, including industry giants like BlackRock Inc (NYSE: BLK) and Fidelity Investments, are also making headway in their conversations with the SEC. 

“Overall, it’s been good engagement, and it’s a matter of when, not a matter of if anymore,” Salm added.

The ongoing talks between Grayscale Investments and the SEC underscore the evolving nature of the cryptocurrency space. It also shows the importance of regulatory clarity for its future growth. While the ultimate outcome remains uncertain, the progress made in these discussions may bring digital assets one step closer to mainstream acceptance. 

Grayscale’s Journey and the Court Battle

Grayscale has long had a relationship with the SEC due to its existing GBTC. However, when it sought to launch an ETF that would directly hold cryptocurrencies, the SEC denied its application. 

A legal battle ensued, culminating in a federal court decision that found the SEC’s rejection to be “arbitrary and capricious.” The court ordered the agency to retract its denial, putting Grayscale’s ETF application back on the regulatory table.

While the crypto community eagerly awaits the SEC’s decision regarding Grayscale’s ETF application and others, SEC Chair Gary Gensler remains cautious in sharing specific details about the commission’s next steps. 

Gensler stated that he would refrain from commenting until the SEC’s staff recommends a course of action. In the meantime, the SEC has been diligently exploring the evolving crypto landscape per its technology and business models, particularly through its corporation finance arm, which will play a central role in evaluating Grayscale’s application.

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