Grayscale petitions SEC to convert GBTC into a spot Bitcoin ETF


  • Grayscale Investments formally requests the SEC to approve the conversion of its GBTC into a spot Bitcoin ETF following a U.S. Appeals Court ruling that overturned the SEC’s previous denial.
  • The asset manager highlights undue regulatory delays and argues that the court ruling leaves no legal ground for the SEC to differentiate between Bitcoin futures ETPs and spot Bitcoin ETPs.

In a significant move that could reshape the cryptocurrency landscape, Grayscale Investments, the world’s largest digital asset manager, has formally submitted a letter to the U.S. Securities and Exchange Commission (SEC), urging the regulatory body to greenlight its proposal to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin Exchange-Traded Fund (ETF). This formal request comes from a recent court ruling, which Grayscale believes leaves the SEC with no justifiable grounds for blocking the conversion.

Court overrules SEC’s previous denial

In a landmark ruling on August 29, a U.S. Appeals Court favoured Grayscale, overturning the SEC’s previous decision to reject the asset manager’s application to transform its existing GBTC product into a traditional Bitcoin ETF. Grayscale’s September 5 letter emphasized the court’s decision, arguing that the SEC no longer has a legal foundation to differentiate between Bitcoin futures exchange traded Products (ETPs) and spot Bitcoin ETPs.

“Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs,” the letter stated. The asset management giant pointed out that the SEC should recognize “no valid reasons” for treating its GBTC offering differently than previously approved Bitcoin futures ETFs.

The long wait for regulatory approval

The letter also highlighted the undue delay in the SEC’s decision-making process concerning Grayscale’s application. Grayscale mentioned that its fund conversion request has been languishing almost three times longer than the duration specified in SEC regulations for such approvals.

“We are confident that if there were any additional grounds for denying the conversion, aside from the Exchange Act’s mandate to prevent fraudulent and manipulative actions, those reasons would have already been evident,” Grayscale added. It also pointed to the fact that the Commission had rejected fifteen other spot Bitcoin ETF applications even after Bitcoin futures ETPs began trading, suggesting a lack of new rationale for its decisions.

Joseph A. Hall, who penned Grayscale’s previous letter to the SEC in July, which urged for the simultaneous approval of all pending ETF applications, concluded the latest submission by stating, “We believe the Trust’s nearly one million investors deserve a level playing field as quickly as possible.”

Impact on GBTC’s market position

The recent Appeals Court ruling has already had a market impact. Following the decision, the GBTC discount, which shows how much an ETF trades above or below its Net Asset Value (NAV), has reduced to 19.9%. This marks a significant recovery, given that during the cryptocurrency bear market that unfolded after the FTX collapse in December 2022, GBTC’s discount had plunged to almost negative 50%.

Investors and market analysts are keenly watching developments around Grayscale’s latest move. Approval from the SEC could not only legitimize the spot Bitcoin ETF. Still, it could also pave the way for future approvals, ushering in a new era of cryptocurrency investment products.


Grayscale’s recent letter to the SEC is a pivotal development that could significantly influence the future of cryptocurrency investment options. If approved, the conversion of GBTC into a spot Bitcoin ETF could open up new avenues for retail and institutional investors alike, providing them with a more secure and regulated investment vehicle for cryptocurrency exposure. The ball is now firmly in the SEC’s court, and the financial world awaits its response.

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Haseeb Shaheen

Written by Haseeb Shaheen

As a Web Researcher and Internet Marketer, Haseeb Shaheen delivers relevant valuable content for audiences. He focuses on financial and crypto market analysis, as well as technology-related areas that help people change their lives.