In our opinion, if we had to bet today, we would bet on another SEC rejection of the first spot ETF on Bitcoin. That is, on the first ETF that will actually hold Bitcoin, and not through futures listed on CME. But let’s take it in order, and also evaluate the specifics of this situation.
According to the data by Coinmarketrate.com, the Grayscale Bitcoin Trust has long been one of the few tools that companies and individuals have for indirect investment in Bitcoin. The idea of Grayscale is to turn this private fund into an ETF, and therefore into a fund whose shares are traded on regulated markets. This is a unique mechanism of its kind, which has no analogues in the world.
The SEC has shown several times that it opposes the approval of such a product. This is due to the fact that, according to Gensler, he would not have a transparent rival with a corresponding market share. Conditions that have not changed at all since the last refusal.
And this is the fundamental point that does not allow us, at least at the moment, to be optimistic about the outcome of this request. We will return to this issue later: for now, the fact remains that few specific circumstances (regardless of whether they are justified by the SEC or not) have changed.
It won’t end on July 6th
Grayscale has trained an important legal team, starting with the hiring of one of the most prominent lawyers of the Obama era. The group has also publicly stated several times that it is ready to take legal action to achieve acceptance.
Of course, the trial will only begin if the approval is refused. If we take the position of the SEC and Grayscale at face value, then the most likely outcome after July 6 will be filing a lawsuit against the SEC.
Settlements with Virtu
This is the latest and most technical of the parts assembled by Grayscale. An agreement has been reached with one of the most important players in the global market. This is done in order to make it easier to bring the AUM in line with the actual price of the fund.
The problem that needs to be solved as soon as possible in the case of a listing, since the value of Grayscale shares is 30% lower than the actual amount of Bitcoin stored.
Gensler, meanwhile, is abandoning Bitcoin, but is actually trying to play a more complex game. He recently expressed seemed to be a capitulation for many BTC enthusiasts. In fact, the head of the SEC said that he was ready to recognize only Bitcoin as a commodity (and, therefore, not a financial security). Although this is undoubtedly beneficial for BTC, which will be out of the regulatory clutches of the SEC, at the same time it is part of a broader SEC strategy.
To see the big picture, we will have to try to understand what kind of clash is happening at the political level and at the level of government agencies in the United States. Recently, a bill was introduced for the world of cryptocurrencies, which effectively deprives the SEC of the ability to regulate a significant part of the industry.
All in favor of another government agency, the CFTC, which instead has the authority to regulate everything except financial securities, and thus all commodities. This is not liked by the SEC, which is obviously losing part of its dream of regulating the cryptocurrency market.
And it is in the light of this that Gary Gensler’s words should be interpreted, since he actually challenged a competing agency, which should be understood as: “Hey, CFTC, I’m ready to give up Bitcoin, but let’s discuss the rest.”
Such an outcome will bring good luck to lobbying groups in Washington who want to keep Bitcoin out of the reach of the SEC, while condemning the rest of the industry. A battle that we expect is just beginning, and in which the allies will redefine themselves along lines we couldn’t have imagined a while ago. New arrangements that will surprise many in the crypto community.
