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Grayscale is lobbying for the US SEC to approve options on its spot Bitcoin exchange-traded fund (ETF), Reuters reported on Feb. 29.
Grayscale CEO Michael Sonnenshein said:
“It is vital to the interests of GBTC and all spot Bitcoin [exchange-traded product] investors to access exchange-listed options on GBTC and other spot Bitcoin ETPs.”
The SEC approved Grayscale’s spot Bitcoin ETF (GBTC) in January. Unlike most of the other newly approved spot Bitcoin ETFs, GBTC was converted to an ETF from an existing fund.
Options could enhance regulation
According to Sonnsenshein, the SEC’s rejection of options on GBTC would unfairly discriminate against shareholders because the regulator has approved options on Bitcoin futures ETFs.
He added that options could also support spot Bitcoin ETF investment more broadly as they could provide price discovery, assist market condition navigation, and support hedging and income generation.
Furthermore, options would bring BTC within the regulatory perimeter, allowing more market participants, including contract merchants and broker-dealers, to trade the funds.
Grayscale’s letter was reportedly prompted by the SEC’s decision to open comments on options for its ETF on Feb. 23. The regulator’s notice also opened comments on Bitwise’s equivalent ETF and other NYSE-listed trusts that hold Bitcoin.
Previously, in January, the SEC opened comments on options for BlackRock’s Nasdaq-listed spot Bitcoin ETF and various Cboe-listed spot Bitcoin ETFs.
Grayscale is a key ETF player
Grayscale’s communications with the SEC are critical because its past efforts have contributed to approvals. After the SEC dismissed Grayscale’s spot Bitcoin ETF application, the firm initiated a legal case against the regulator and won a victory that compelled the SEC to re-address the matter.
SEC chair Gary Gensler cited that outcome in his agency’s approval of spot Bitcoin ETFs, noting that the legal result made approval the “most sustainable path forward.”
The company and other asset managers have also applied for spot Ethereum ETFs. Grayscale’s application recently gained support from Coinbase on Feb. 21.
While Grayscale’s latest letter does not compel the SEC to act in any way, the company’s past significance means that its comment could influence future outcomes.