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Posted:
- Grayscale agreed to the cash-only model as mandated by the SEC.
- A decision on Grayscale’s application will be made on January 10.
Crypto asset management company Grayscale has filed a revised S-3 filing with the US Securities and Exchange Commission (SEC) to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin [BTC] ETF, according to Bloomberg research analyst James Seyffart.
UPDATE: @Grayscale just filed another amended S-3 to convert $GBTC in a #Bitcoin ETF. pic.twitter.com/TKPP9ufa9X
— James Seyffart (@JSeyff) December 26, 2023
Grayscale compromises for approval
Recall that the regulator has set December 29 as the deadline for submitting final amendments to the respective filings. Companies that miss this cut-off date will not be eligible for the first wave of potential approvals in January 2024.
One of the notable aspects of the amended filing was that Grayscale agreed to the cash-only model as mandated by the SEC. Seyffart viewed this development as “bending the knee” by the world’s largest digital asset manager.
However, Grayscale was not the first to succumb to the diktat. BlackRock and ARK Invest previously made changes to their documents to comply with the cash creation and redemption model.
Understanding the conflict
For the uninitiated, the SEC’s cash-only requirement means that the underlying assets of ETFs can only be exchanged/redeemed through cash transactions at a market maker, as opposed to the in-kind model common to equity-based based ETFs.
While this helps align the ETF’s share price with the underlying asset, in this case Bitcoin, it could make the stock more expensive for investors.
Grayscale’s stance reflected that it was willing to make compromises to be among the first wave of approvals.
Overall, the company has been optimistic about its prospects since the court ruled in its favor in August. The court had ordered the SEC to reconsider its previous denials of Grayscale’s request to convert the trust into a spot Bitcoin ETF.
A decision on Grayscale’s application will be made on January 10.
How much are 1,10,100 BTCs worth today?
GBTC discount is getting smaller
Since the legal victory, the fund’s discount on its underlying Bitcoin holdings has narrowed significantly. According to Mint glassit dropped to 5.51% according to a recent update.
When the discount narrows, it generally means that investors had a more positive view of GBTC. Coinglass predicted the discount will close in the first quarter of 2024.
Source: Coinglass