Grayscale is actively seeking the green light from the U.S. Securities and Exchange Commission (SEC) to convert Bitcoin Trust (GBTC) into a spot Bitcoin ETF. As anticipation grows for SEC approval of spot Bitcoin ETF filings, Grayscale aims to dispel the confusion surrounding the tax implications for GBTC shareholders.
In a recent twist, a Bloomberg Intelligence report raised concerns that Grayscale might need to engage in taxable activities, such as buying and selling Bitcoin (BTC), for ETF creations and redemptions. This could potentially complicate the conversion of GBTC into a spot ETF. However, Grayscale clarified that spot commodity ETFs typically function as grantor trusts for tax purposes, meaning capital gains tax is not applicable.
Grayscale emphasized that no spot commodity ETF operating as a grantor trust would face a disadvantage relative to others. This applies specifically to the carrying value of the ETF’s assets. This clarification addresses uncertainties and reinforces the case for converting GBTC into a spot Bitcoin ETF.
Furthermore, the SEC is reviewing Grayscale’s filing for the GBTC conversion. A significant development occurred on August 29, 2023, when the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale’s petition to review the SEC’s decision to deny approval. Although the ruling did not directly mandate GBTC’s conversion, it paved the way for potential approval within a defined timeline.
SEC Discussions And Speculation on Bitcoin ETF Approval
The large players, including Black Rock, Grayscale, Fidelity, and Franklin Templeton, met with the SEC over the past two weeks. In addition, on the 14th of December, Bloomberg’s website posted news about an interaction between Blackrock and the commission, leading to assumptions
Furthermore, in this context, the price of Bitcoin has hit a record high of about fifteen months. Market obsession attributes these rallies to the anticipation of institutional funds flowing into the market upon approval. This coincides with the scheduled bitcoin halving in the second quarter of 2024.
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