Sonnenshein, CEO of Grayscale:  The plot thickens on the path to $GBTC’s spot Bitcoin ETF conversion.

Today, the SEC approved another US-based Bitcoin futures ETF. Great, right? We agree. But it’s important to realize that not all Bitcoin futures ETFs are created equal.

Prior to today, the US had 3 Bitcoin futures ETFs: $BITO, $XBTF and $BFT. Each of these hold CME Bitcoin futures and are registered under the ’40 Act. An 80+ year old set of regulations that govern many investment products on the market today.  Speeches have been given asserting that ’40 Act registered products provide greater investor protections.  And as recently as last week the SEC cited the different set of standards under the ‘40 Act as being the reason to continue to deny/reject spot Bitcoin ETFs registered under the ’33 Act cc

As of today, those arguments have been significantly weakened as the SEC approved the Teucrium Bitcoin Futures ETF, which is registered under the ’33 Act, and not the ‘40 Act.

With Bitcoin investment products registered under both the ‘33 and ‘40 Acts, let’s examine the potential impact to spot Bitcoin ETF applicants, including GBTC.

First, the SEC has a weaker argument that the different protections & standards that apply to the ‘40 Act vs. the ‘33 Act are reasons for denying spot Bitcoin ETFs, despite using that argument for every single spot Bitcoin ETF denial since Bitcoin futures ETFs started trading. Note: $GBTC’s conversion to an ETF would be registered under the ‘33 Act.

Second, the SEC made interesting commentary in the Teucrium approval, particularly concerning what it refers to as ‘regulated markets of significant size’.

Historically, the SEC asserted that the absence of regulated *markets of significant size* related to the *underlying assets* (ie Bitcoin) were a critical/missing element to the approval of a spot Bitcoin ETF.

Today, in approving Teucrium’s application under the ‘33 Act, the SEC cleverly decided to define the “market” as just the CMEGroup and the “underlying assets” as just CME Bitcoin futures, which of course makes CME significant since it’s 100% of the CME Bitcoin futures market!

What’s wrong with this argument? Well, digging deeper, let’s remember that CME Bitcoin futures are *priced based on spot Bitcoin markets* and therefore directly influenced by them.

The SEC even acknowledges this linkage in the Teucrium approval “the Commission is not persuaded that the market for CME bitcoin futures contracts “stands alone;” has a “lack of connection” with, and is “not specifically materially influenced” by, other bitcoin markets”.

Therefore, if the SEC is comfortable with a Bitcoin futures ETF, they must also be comfortable with a spot Bitcoin ETF. And they can no longer justifiably cite the ‘40 Act as being the differentiating factor.

This is the argument Grayscale has continued to make since filing our application to convert GBTC to a spot Bitcoin ETF. And today that argument becomes even stronger. Thanks to TeucriumETFs and Congratulations.

If you agree with these arguments, there’s no better way to ensure your voice is heard than to write to the SEC as they consider $GBTC’s ETF conversion.