Key Takeaways
- Grayscale files an amended S-3 filing for a Bitcoin ETF, coinciding with Barry Silbert's resignation from the company;
- Speculation arises that Silbert's departure is part of a strategy to enhance the ETF's chances of SEC approval amid an ongoing SEC investigation;
- Grayscale's shift to a cash creation model in its ETF filing raises questions about its viability and potential risks for investors, given the SEC's focus on investor protection.
Grayscale's amended S-3 filing with the SEC, submitted on the same day as Barry Silbert's resignation from Grayscale's board of directors, marks a pivotal moment in the pursuit of a spot Bitcoin ETF.
Ramah Luwalia, CEO of Lumida Wealth, speculates that Silbert's departure was a strategic move to improve the ETF's approval prospects, given the SEC's ongoing investigation into Silbert and DCG.
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Adam Cochran, a partner at Cinneamhain Ventures, also suggests that Silbert's resignation may have been part of an agreement between Grayscale and the SEC ahead of the ETF conversion request.
Silbert's departure was formalized through an 8-K filing to the SEC on December 26, with Mark Shifke, DCG's chief financial officer, set to succeed Silbert as chairman of the board at Grayscale.
In the amended S-3 filing, the most noteworthy change is Grayscale's shift toward a cash creation model. This adjustment is seen as a strategic concession by Grayscale in its pursuit of the spot Bitcoin ETF.
Eric Balchunas, senior Bloomberg ETF analyst, observes that Grayscale has "finally surrendered" to this model.
Cash creation, in contrast to in-kind creations, implies that new shares in a spot Bitcoin ETF can only be created or redeemed through cash transactions.
The SEC's stance on preventing broker-dealers from directly handling Bitcoin is seen as an effort to enhance oversight and compliance with anti-money laundering and Know Your Customer regulations.
However, Scott Johnsson, general partner at VB Capital, raises concerns about the SEC's approach, noting that while the SEC claims to prioritize investor protection, the cash creation model may introduce greater risks for investors seeking exposure to BTC through a spot ETF.
He highlights that most other spot commodity ETFs operate on an in-kind model, making the move to cash creation a novel and uncertain endeavor.
Nevertheless, as the SEC evaluates Grayscale's ETF application, the crypto community eagerly awaits the outcome of this significant step towards greater accessibility to Bitcoin investments through traditional financial markets.
