Is the Grayscale GBTC, an ETF or a Trust?
Gregory S. Davis | January 7, 2025
Reviewed by etfready.com staff
The Grayscale GBTC is an Exchange Traded Fund (ETF), but that was not always true. TFThe Grayscale Bitcoin Trust initially began in 2013 as a Trust accessible to accredited investors. In 2021 Grayscale resubmitted an application to uplist GBTC as a spot Bitcoin ETP. According to SEC.gov accredited investors meet the following criteria:
Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.
What is a Spot Bitcoin ETP?
Spot bitcoin ETPs are exchange-traded products that track the price of bitcoin by holding actual bitcoin (i.e., "spot") as their underlying asset.
Grayscale files suit
In June 2022 Grayscale filed a lawsuit in the DC Circuit Court of Appeals in response to the SEC’s decision to deny GBTC's proposal to uplist as a spot Bitcoin ETP.
What did Grayscale argue?
Grayscale argued that its proposed bitcoin exchange-traded product was materially similar to bitcoin futures exchange traded products, including the ProShares Bitcoin ETF (BITO), which had already received approval from the Securities and Exchange Commission.
Why did the SEC lose?
The SEC failed to provide adequate explanation why the Grayscale Bitcoin ETP should receive different treatment than the bitcoin futures exchange traded product previously approved by the SEC.
How was the SEC able to deny previous applications by Bitcoin ETP providers?
The SEC was able to deny previous applications because in each instance the SEC found the proposed products were not designed to prevent fraudulent and manipulative acts and practices as required by the SEC Act.
Holding
On August 29, 2023, the United States Court of Appeals, District of Columbia Circuit Court held that the SEC could not prevent Grayscale from uplisting GBTC as a spot Bitcoin ETP.
When the GBTC become a Spot Bitcoin ETP?
Subsequent to the court case GBTC uplisted to the NYSE as a spot Bitcoin ETP in January 2024.