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Grayscale Updates Spot Bitcoin ETF Application but Left out Some Key Information

Crypto asset management firm Grayscale Investments has updated its spot bitcoin ETF filing in hope of being included in the initial round of decisions by the U.S. Securities and Exchange Commission (SEC). However, the firm has omitted some key information that the SEC reportedly wants included in the filing, which several other asset managers have disclosed, including details relating to authorized participants.

Grayscale Files 3rd Amendment to Spot Bitcoin ETF Filing

Most asset managers seeking to launch a spot bitcoin exchange-traded fund (ETF) updated their applications with the U.S. Securities and Exchange Commission (SEC) on Friday, which was the deadline given by the regulator for amended filings. Grayscale filed the third amendment to its S-3 filing to convert its bitcoin trust (GBTC) into a spot bitcoin ETF on Friday.

Commenting on Grayscale’s amended filing, Bloomberg ETF analyst Eric Balchunas shared on social media platform X Tuesday:

New Grayscale amendment just dropped. Clear language on cash only but still no AP [authorized participant] 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.

The analyst further pointed out that there was nothing about the fee in Grayscale’s amended filing that he could see. The firm’s authorized participant agreement is found in Exhibit 4.5 of the filing.

The SEC reportedly required spot bitcoin ETF applicants to submit updated filings by last Friday to be considered in the initial round of decisions. The first deadline is Jan. 10 for Ark Invest and 21shares’ joint filing. However, some expect the SEC to make a decision before that date.

While Grayscale did not name any authorized participants, CEO Michael Sonnenshein insisted that his company has lined up some authorized participants a long time ago. In an X post on Dec. 29, he wrote: “Been in this game a long time … we’ve had APs lined up since 2017.” He referenced a news article published in June 2022 stating that Grayscale would work with Jane Street and Virtu Financial as authorized participants should the SEC approve GBTC’s conversion into a spot bitcoin ETF.

Meanwhile, several other spot bitcoin ETF applicants have named their authorized participants in their filings, including Blackrock, the world’s largest asset manager, which named Jane Street and JPMorgan. Wisdomtree, Fidelity, and Valkyrie also named Jane Street while Invesco/Galaxy named Virtu and JPMorgan.

After initially rejecting Grayscale’s spot bitcoin ETF proposal, the SEC faces a court order to reevaluate it. Grayscale and several other spot bitcoin ETF applicants want to use the in-kind creation model for their spot bitcoin ETFs but the SEC is adamant about using the cash creation method. Grayscale then adopted the cash method in its second amendment. The company also recently announced the resignation of Barry Silbert from its board of directors.

Do you think Grayscale will be among the first companies to be approved for spot bitcoin ETFs by the SEC? Let us know in the comments section below.

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