SEC does not turn to Grayscale for approval? Grayscale re-applies for a new ETF, with some funds invested in Bitcoin spot ETPs from other countries.

It is well known that Grayscale has been trying to convert GBTC into a Bitcoin spot ETF, but has been consistently rejected by the SEC. However, it seems that Grayscale has now found a way to bypass the SEC's restrictions.

Grayscale announced on May 9th that it has submitted three new funds to the SEC, namely: 1. Grayscale Global Bitcoin Composite Index ETF, 2. Grayscale Ethereum Futures ETF, 3. Grayscale Privacy ETF.

In addition to the three new funds pending approval, Grayscale has also filed with the SEC, and a court ruling may be made in Q3. Details can be found at: Grayscale files three new fund applications with the SEC, including Ethereum Futures ETF, no longer focusing on spot trading.

The Financial Times FT pointed out that Grayscale's Global Bitcoin Composite Index ETF may involve investing in Bitcoin spot markets.

In Grayscale's application document, Grayscale Global Bitcoin Composite Index ETF explicitly states that it will invest in: non-U.S. exchange-traded products or investment instruments, which hold or are backed by physical Bitcoin. The SEC currently only approves Bitcoin futures ETFs.

The original text reads:

Typically include: i exchange-traded products listed on major non-U.S. exchanges, exchange-traded notes (ETNs), or other exchange-traded collective investment instruments that hold or are backed by physical Bitcoin, or synthetically track the Bitcoin price in the absence of futures investments, and meet certain asset and liquidity thresholds collectively referred to as "Bitcoin ETP."

Some believe that Grayscale's approach may be successful.

The SEC's argument has always been that futures ETFs hold contracts on the CME, which is regulated by the CFTC, while the overseas ETPs that Grayscale intends to invest in are regulated securities, meaning the SEC insists that the assets types held by a Bitcoin ETF cannot be spot assets, so it may pass.

On the other hand, there are already a large number of U.S. ETFs holding regulated foreign securities, although these ETFs primarily hold stocks and bonds, the structure is similar at least.

Even if the application is approved, it does not mean that GBTC can be converted into a physical Bitcoin ETF in the future. Holding regulated foreign securities backed by physical Bitcoin and holding physical Bitcoin itself are completely different concepts. In case of any issues such as clearing and custody, the SEC cannot fully protect investors.

The market's view on Grayscale's ETF application is not very optimistic.

Bryan Armour, director of passive strategy research at Morningstar, believes that the structure of this portfolio is quite confusing, and compared to Bitcoin futures ETFs, the performance of the Global Bitcoin Composite Index ETF in tracking spot prices is worse, so he is not sure if this product can provide any value other than understanding the SEC's standards.

However, Grayscale's CEO is quite optimistic. He believes that the crypto market has already emerged from the bear market, and there is still strong demand for cryptocurrencies from investors.