Leading digital asset management firm Grayscale has updated the application with the United States Securities and Exchange Commission (SEC) for its Spot Bitcoin (BTC) Exchange-Traded Fund (ETF). The Grayscale Bitcoin ETF amendment comes at a time when Barry Silbert and Mark Murphy, the chief executive and president of the firm’s parent company, Digital Currency Group (DCG), respectively, announced their resignation from the board of directors.
Grayscale Bitcoin ETF: S-3 Filing Amendment
Grayscale’s recent amendment stands as a clear adherence to SEC guidelines, specifically aligning itself with a cash-only order acceptance policy. Beyond a mere compliance move, it signals a calculated shift in strategy. Notably, the firm is positioning itself to compete with major players, including BlackRock, within the competitive ETF market.
This adjustment gains significance as Grayscale approaches a pivotal approval deadline in January. As per the filing, the company is undergoing structural adaptations, transitioning from a monthly to a daily fee structure, and streamlining share creation and redemption processes.
These changes underscore Grayscale‘s preparedness to make a substantial impact in the evolving ETF arena, reflecting a proactive stance in the digital asset investment landscape.
Adoption of a Cash Creation Model
Eric Balchunas, a Bloomberg ETF analyst, pointed out that Grayscale has finally adopted “cash-only creations.” The new model for a Spot Bitcoin ETF dictates that the creation or redemption of fresh shares occurs exclusively through cash transactions, diverging from the prevalent in-kind model observed in most stock and commodity-based ETFs.
Unlike those where fund market participants directly manage the underlying asset, this shift has been a focal point of contention between asset managers seeking to launch a Spot Bitcoin ETF and the SEC. Balchunas described Grayscale’s recent adoption of the cash creation model as the company “finally surrendering” to this methodology, which is a notable change from its prior stance.
Related reading: SEC Gets Its Way: Revised BlackRock Spot Bitcoin ETF Allows Cash
Notably, as ETF analyst James Seyffart points out, Grayscale filed the update the same day when Silbert and Murphy announced their departure from the firm. Interestingly, some members of the digital asset community believe that Silbert’s departure is a positive turn of events for the approval of Grayscale’s application.
It is currently unknown why the two executives left, as the firm has yet to address their departure. The announcement reads:
“Effective January 1, 2024, the board consists of Mr. Shifke, Mr. Kummell, Michael Sonnenshein, and Mr. McGee, who also retain the authority granted to them as officers under the limited liability company agreement of the sponsor.”
As reported earlier by Bitcoinnews, Gary Gensler, the Chairman of the SEC, acknowledged that his agency “had in the past denied a number of these [ETF] applications.” However, he stated that the SEC is now considering a new approach to Spot Bitcoin ETFs after the judges ruled in favor of Grayscale in a lawsuit revolving around the firm’s request to convert its GBTC product into a Spot ETF.
As the SEC takes a proactive approach, Grayscale’s recent actions, coupled with executive changes, prompt anticipation and speculation within the digital asset community.
