The Securities and Exchange Commission or SEC still has concerns about Grayscale Spot Bitcoin ETF Proposal. The Commission is delaying approving Grayscale’s application.
Moreover, the regulatory authority cites issues related to manipulation, transparency, and liquidity.
Grayscale is a subsidiary of Digital Currency Group. It is a company that manages crypto-related investments.
The company provides many products. Additionally, The Grayscale Bitcoin Trust (GBTC) is one of their investment products. Moreover, investors can buy and sell the product with the help of their brokerage account.
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Not Sure If Grayscale Can Prevent Fraud Says SEC
The Securities and Exchange Commission is questioning Grayscale about converting their GBTC ETF into a spot ETF. Moreover, the Commission is not convinced about certain parts of the company’s proposal.
These parts are about fraud prevention in the Bitcoin market. Hence, the regulatory authority is delaying approval. Moreover, they invite the public to 21 days to submit their views on these issues.
Grayscale Bitcoin Trust filed its proposal to convert into a Bitcoin spot ETF in October 2021. However, in December 2021, the SEC delayed reviewing the proposal by 45 days.
Last year, Grayscale decided to go ahead with its spot ETF conversion. The company’s communications director, Jennifer Rosenthal, tweeted in October 2021 about it.
She said that the ETF proposal will start “When the SEC has formally expressed their requisite comfort with the underlying Bitcoin market.”
Accordingly, Rosenthal added that they would start their ETF process when the SEC is comfortable giving approvals to forms of the ETF.
SEC Is Hesitant About Spot Bitcoin ETF
The regulatory authority has concerns about the Spot Exchange Traded Fund.
In the past, the SEC has rejected almost all Spot BTC applications. According to analysts, this shows the difference of opinions between the applicants and the regulatory body.
Moreover, the SEC has rejected spot BTC ETF proposals of many companies. Fidelity’s Wise Origin Bitcoin Trust, Van Eck Bitcoin Trust, Krypto in Bitcoin ETF Trust are a few names.
However, the regulatory body is open to approving Future Bitcoin ETFs.
Additionally, SEC rejection is less to do with the quality of the applicants. According to many analysts, the nature of the spot market is causing denial and delays.
Future Bitcoin ETFs trading happens on the regulated market. However, the same is not valid for the spot market. The spot market is volatile and fragmented.
Hence, due to market fraud and volatility, SEC approval for spot Bitcoin ETF will be slow.
