April 19, 2024
Grayscale Renews Bitcoin ETF Filing, Silbert Departs
Latest Cryptocurrency News

Grayscale Renews Bitcoin ETF Filing, Silbert Departs

Grayscale has amended its S-3 filing, a move seen as capitulation to cash creations, as it seeks to convert GBTC into a spot Bitcoin ETF. Barry Silbert, Digital Currency Group’s CEO, resigned from Grayscale’s board on the same day.

This development coincides with the ongoing SEC investigation into Silbert and DCG. Analysts speculate that Silbert’s departure may boost the chances of the ETF’s approval, possibly part of an agreement between Grayscale and the SEC.

Lumida Wealth CEO Ram Ahluwalia suggests Silbert’s resignation is likely aimed at improving ETF approval odds, given the regulatory scrutiny. Adam Cochran of Cinneamhain Ventures views Silbert’s decision as a pre-approval agreement with the SEC.

The SEC’s ongoing investigation into Silbert and DCG adds complexity to the ETF conversion process. Grayscale’s amended filing introduces a noteworthy change, with the company embracing a cash creation model. Senior Bloomberg ETF analyst Eric Balchunas notes that Grayscale has “finally surrendered” to this model, marking a departure from its previous stance.

Cash vs. in-kind creations have been a contentious issue, especially regarding the SEC’s reluctance to allow direct broker-dealer dealings with Bitcoin. The SEC’s move to prevent broker-dealers from directly engaging with Bitcoin aims to enhance tracking and reduce potential risks related to anti-money laundering and Know Your Customer compliance.

Grayscale’s shift to a cash creation model for its spot Bitcoin ETF, in contrast to the traditional in-kind model, raises concerns. Scott Johnsson, general partner at VB Capital, questions the SEC’s stance, pointing out that the cash creation model diverges from the norm followed by other spot commodity ETFs.

He emphasizes the uncertainty surrounding the effectiveness of this novel approach and highlights potential risks for investors seeking exposure to Bitcoin through a spot ETF. Grayscale’s filing also announces Mark Shifke, DCG’s chief financial officer, as the new chairman of Grayscale’s board, succeeding Silbert.

The evolving dynamics within Grayscale and its approach to the ETF conversion will likely impact the broader crypto investment landscape.

Photo by Ivan Babydov

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