Grayscale has submitted an amended S-3 filing with the United States securities regulator, coinciding with the resignation of Barry Silbert, the CEO of its parent company, Digital Currency Group (DCG), from Grayscale’s board of directors.
Silbert’s Exit: Game-Changer for Grayscale
Speculation is rife within the crypto market regarding the potential impact of Silbert’s departure on Grayscale’s pursuit of converting its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. The awaited decision from the Securities and Exchange Commission (SEC) has heightened the anticipation surrounding this move.
Ramah Luwalia, CEO of Lumida Wealth, suggests that Silbert’s voluntary resignation could be a strategic maneuver to improve the odds of obtaining ETF approval, given the SEC’s ongoing investigation into Silbert and DCG.
Adam Cochran, a partner at Cinneamhain Ventures, goes a step further, asserting that Silbert’s decision to step down was likely a prearranged agreement between Grayscale and the SEC, strategically timed ahead of the conversion request’s approval.
The announcement of Silbert’s departure was formally made in an 8-K filing to the SEC on December 26, with the additional disclosure that Mark Shifke, DCG’s chief financial officer, would succeed Silbert as chairman of the board at Grayscale.
Cash Model Unveiled: Will it Secure Bitcoin ETF?
A notable revelation in the amended S-3 filing is Grayscale’s shift to a cash creation model, as highlighted by senior Bloomberg ETF analyst Eric Balchunas. This development is seen as a significant departure from the previous in-kind model, causing a stir among market participants.
The ongoing debate over cash versus in-kind creations is central to the conflict between asset managers aiming to launch a spot Bitcoin ETF and the SEC. While traditional ETFs typically operate on an in-kind model, Grayscale’s move to a cash-creation model means that new shares in a spot Bitcoin ETF would only be created or redeemed through cash transactions.
The SEC’s restriction on broker-dealers directly interacting with Bitcoin is interpreted as a move to enhance tracking of Bitcoin movements and mitigate potential risks related to anti-money laundering and Know Your Customer compliance.
Scott Johnsson, general partner at VB Capital, expressed concern over the SEC’s choice of the cash creation model, emphasizing the novelty of this approach compared to other spot commodity ETFs. He questioned the effectiveness of this method and highlighted potential risks for investors seeking exposure to Bitcoin through a spot ETF.
As Grayscale navigates these strategic changes, the crypto community eagerly awaits the SEC’s decision on the spot Bitcoin ETF, with speculation intensifying following Silbert’s departure and the adoption of the cash creation model.
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