SEC Engages with Grayscale and Others Over Spot Bitcoin ETF Approval

In late November, the U.S. Securities and Exchange Commission (SEC) held discussions with key players, including Grayscale and BlackRock, concerning proposed spot Bitcoin exchange-traded funds (ETFs).

Grayscale's Pursuit of Rule Change

The SEC's Division of Trading and Markets met with Grayscale, led by CEO Michael Sonnenshein, and legal representatives from Davis Polk on November 29. This marked the latest in a series of meetings dating back to 2022. The primary focus was on a proposed rule change allowing NYSE Arca to list and trade Grayscale Bitcoin Trust (GBTC) shares. Grayscale aims to transform GBTC into a spot Bitcoin ETF.

BlackRock's iShares Spot Bitcoin ETF

On November 28 and 20, the SEC engaged in talks with BlackRock regarding its iShares spot Bitcoin ETF. Discussions revolved around the comparison between in-kind and cash redemption models, critical in determining how ETF participants conduct transactions—whether in cryptocurrency or cash.

Broader Industry Engagement

The SEC's engagement extended to other major players in the industry. Meetings were held with asset manager Hashdex, as well as Bitwise, VanEck, Fidelity, and Invesco, all presenting their respective spot Bitcoin ETF proposals. Additionally, discussions with 21Shares, representing Ark Invest's proposal, took place towards the end of November. Notably, WisdomTree, Valkyrie, and GlobalX did not feature in the disclosed meetings.

SEC's Stance on Spot Bitcoin ETF Approval

Despite these meetings, the SEC has not publicly expressed intentions to approve a spot Bitcoin ETF. The regulatory body remains cautious, carefully considering various proposals and potential impacts on the market.

The SEC's reserved position indicates a deliberate approach, prioritizing thorough evaluation over hasty approvals in the evolving landscape of spot Bitcoin ETFs.