As Barry Silbert leaves, Grayscale is restocking the Bitcoin ETF app
Crypto asset manager Grayscale filed an amended S-3 filing with U.S. securities regulators on the same day Barry Silbert — CEO of parent company Digital Currency Group — announced his resignation from Grayscale's board of directors.
Some crypto market analysts speculate that Silbert's release could significantly increase the chances of Greyscale successfully converting the Greyscale Bitcoin Trust (GBTC) into a bitcoin ETF, pending a decision from the Securities and Exchange Commission.
Barry's release was @Sonnenshein's X-Mas present.
What does @bsilbert have to do with leaving grayscale?
Grayscale held 9 meetings with the SEC, as shown in the table below (h/t @JSeyff)
Today, there are only pending cases against DCG in court… pic.twitter.com/NjjdWq0F3a
— Ram Ahluwalia CFA, Lumida (@ramahluwalia) December 26;
Lumida Wealth CEO Ramah Luwalia speculates that Silbert's resignation may be on his own accord to improve the ETF's approval — largely because of the SEC's ongoing investigation into Silbert and DCG.
Adam Cochran, a partner at crypto venture capital firm Cinneamhain Ventures, speculated that Silbert's decision to step down was a “definitive deal” between Grayscale and the SEC before the conversion request was approved.
And here it is, this step down to join the ETF steps is Barry's deal to be out of grayscale.
Glad to load up on highly discounted GBTC and ETHE today. https://t.co/89G2QVOAEJ
— Adam Cochran (@adamscochran.eth) (@adamscochran) December 26, 2023
Silbert's departure was noted in an 8-K filing with the SEC on Dec. 26, where the firm announced that DCG Chief Financial Officer Mark Schiffke would replace Silbert as Grayscale's board chairman.
Aside from Silbert's ouster, the most notable part of the revised S-3 filing is that grayscale has “finally surrendered” to the monetization model, said Eric Balchunas, an ETF analyst at Bloomberg.
Grayscale was ultimately dedicated to cash-only innovations. It's pretty sure they have the AP deal (the crucial last step) so it ticks all the boxes. That said, it's still a mystery if they'll be allowed to go on day one of the Cointucky Derby https://t.co/Wm7TfD3zkP
— Eric Balchunas (@EricBalchunas) December 26, 2023
It has been an ongoing point of contention between asset managers looking to launch Bitcoin ETFs and SEC space in cash and in-kind innovations.
Related: Spot Bitcoin ETF Earnings Could Weak All 163 Crypto ETPs Today
While most of the ETFs based on stocks and commodities work in kind – it allows the participants of the fund market to directly hold the assets in the fund – the money creation model means that new shares can be created or bought in one place, only Bitcoin ETF can be bought through cash transactions.
The SEC's move to prevent broker-dealers from dealing directly with Bitcoin is to better monitor Bitcoin from exchanges and mitigate potential risks associated with anti-money laundering or Know Your Client compliance.
Scott Johnson, general partner at VB Capital, said that while the SEC believes it stands to protect investors, the cash creation model could create more risk for investors seeking exposure to Bitcoin through a spot ETF.
Greyscale's modified S-3 provides a nice little background on the key sticking point of type creation/redemption. The SEC has issued regulations to protect digital assets. Although BDs and exchanges believe that they comply with the regulation and provide… pic.twitter.com/SdudYdsgoR
— Scott Johnson (@SGJohnsson) December 27, 2023
“While other spot commodity ETFs work with type models, this one has to be done in a new way with cash, and who knows if that will work,” Johnson wrote.
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