Grayscale has recently submitted an updated S-3 filing to the United States securities regulator, indicating its intention to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. This development coincided with the announcement of Barry Silbert’s resignation from Grayscale’s board of directors. Silbert is also the CEO of Digital Currency Group, Grayscale’s parent company.
There is speculation within the crypto market that Silbert’s departure could potentially enhance the likelihood of Grayscale successfully transitioning its GBTC into a spot Bitcoin ETF. The proposal is currently under review by the Securities and Exchange Commission.
The departure of Silbert was documented in an 8-K submission to the SEC on Dec. 26. The company announced that Mark Shifke, the Chief Financial Officer of DCG, would take over Silbert’s role as the Chairman of the Board at Grayscale. With this amendment, Grayscale will enable the creation and redemption of funds using cash, a move that aligns with the actions of other spot Bitcoin ETF applicants, such as BlackRock.
Grayscale’s Updated S-3 Filing: Paving the Way for ETF Approval
Bloomberg’s Senior ETF analyst, Eric Balchunas, described Grayscale’s updated submission as a vital last step in the process of gaining approval to transform its Bitcoin Trust into an exchange-traded fund (ETF). In recent weeks, the SEC has been adamant that ETF applicants manage funds in a particular manner, showing a preference for cash creation over the in-kind approach.
The choice between cash and in-kind creations has been a persistent source of disagreement between asset managers aiming to introduce a spot Bitcoin ETF and the SEC. Most ETFs based on stocks and commodities operate on an in-kind model, which permits fund market participants to manage the assets in the fund directly.
However, a cash-creation model implies that new shares in a spot Bitcoin ETF can only be created or redeemed via cash transactions. The SEC’s initiative to restrict broker-dealers from transacting directly with Bitcoin is perceived as an effort to more effectively monitor the movement of Bitcoin from exchanges and to reduce any potential risks related to anti-money laundering or Know Your Customer compliance.