Grayscale filed a new application with the SEC for a spot Bitcoin ETF. But a lawsuit against its parent company could complicate matters

Grayscale filed a new application with the Securities and Exchange Commission for its Grayscale Bitcoin Trust as it looks to secure one of the first spot Bitcoin ETFs in the U.S.

The application, filed Thursday, is laying the groundwork for the company’s Grayscale Bitcoin Trust (GBTC) digital currency investment product to operate as a spot Bitcoin ETF listed on the New York Stock Exchange, pending SEC approval of its S-3 form. 

“Importantly, GBTC is ready to operate as an ETF upon receipt of these regulatory approvals, and on behalf of GBTC’s investors, Grayscale looks forward to working collaboratively and expeditiously with the SEC on these matters,” the company said in a statement. 

The new filing comes after Grayscale’s recent court victory over the SEC in which the company was told the agency had no basis for denying Grayscale’s request to convert its GBTC product into a spot Bitcoin ETF. Last week, the SEC declined to appeal that ruling, improving the odds that a spot Bitcoin ETF is approved in the coming months. 

But whether Grayscale is among the first to receive approval for a new ETF remains uncertain. On Thursday, New York State Attorney General Letitia James sued Grayscale parent company Digital Currency Group, along with crypto exchange Gemini and DCG subsidiary Genesis, a crypto lending firm. The lawsuit claims DCG was partly responsible for defrauding investors of more than $1 billion.

The lawsuit is also seeking to bar DCG from engaging in securities and commodities-related business in New York, which could complicate Grayscale’s effort to list a product on the NYSE.

Still, as of Thursday, GBTC’s discount compared with its net asset value was closing, signifying that investors were increasingly confident in the product. The exchange-traded product was trading down less than 1%, around $22.18, as of Thursday morning.

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About the Author: Daniel