March 27, 2024
Grayscale's Spot Bitcoin ETF Filing Raises Eyebrows with Missing Authorized Participants
Bitcoin ETF

Grayscale’s Spot Bitcoin ETF Filing Raises Eyebrows with Missing Authorized Participants

Cryptocurrency asset manager Grayscale has made an amended filing for its Bitcoin exchange-traded fund (ETF) application, a move that caught the attention of industry analysts. The amended application, flagged by Bloomberg’s senior ETF analyst Eric Balchunas on X (formerly Twitter), lacks the details of authorized participants, a key element in the SEC’s scrutiny process.

In the amended filing, Grayscale clarified that authorized participants for its proposed ETF would only transact in cash for shares. Notably, the filing did not include the names of the authorized participants, a departure from the approach taken by other companies seeking to launch Bitcoin ETFs. This omission has raised questions and concerns within the industry.

Balchunas expressed uncertainty about Grayscale’s decision to exclude authorized participant details, stating on Twitter, “Not sure why since SEC wants to see it, and they have been pretty cocksure about having one. Also, nothing on fee (that I could see). That’s a big open q too.”

On December 29, seven companies, including Fidelity, WisdomTree, and Invesco Galaxy, submitted updated Form S-1 applications in their quest to launch the first U.S. Bitcoin ETFs. In their filings, these companies listed their authorized participants, which are financial institutions or companies authorized to create and redeem shares of an ETF.

Grayscale had previously indicated in June 2022 that it intended to list Jane Street and Virtu Financial as its authorized participants as it sought to convert its Grayscale Bitcoin Trust into an ETF. Balchunas highlighted the confusion, stating, “Yes, and they even tweeted that of course they have one, but all I know (in Philly accent) it isn’t in doc yet (which SEC wants), and until we see, we aren’t counting any horse as official. Also, BlackRock, Fidelity et al did it, so why not be done with it?”

The submission of Grayscale’s amended S-3 filing with the SEC on December 27 coincided with the announcement of Barry Silbert’s resignation from Grayscale’s board of directors. Silbert is the CEO of Digital Currency Group, the parent company of Grayscale.

The SEC’s deadline to deliver its verdict on the latest Bitcoin ETF filings is set for January 10. Industry experts speculate that the SEC is likely to respond to the applying firms by the end of the first week of 2024. The development surrounding Grayscale’s amended filing adds a layer of intrigue to the ongoing saga of Bitcoin ETF applications awaiting regulatory approval.


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