Grayscale refiles Bitcoin ETF application as Barry Silbert departs: difference between web 1.0 web 2.0 and web 3.0.
Grayscale refiles Bitcoin ETF application as Barry Silbert departs

Barry Silbert’s Resignation and Grayscale’s S-3 Filing

On the same day that Barry Silbert — CEO of Grayscale’s parent company Digital Currency Group — announced his resignation from Grayscale’s board of directors, the crypto asset manager filed an amended S-3 with the United States securities regulator.

Crypto market commentators are speculating that Silbert’s departure could increase the chances of Grayscale successfully converting its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, which is currently awaiting a decision from the Securities and Exchange Commission.

Lumida Wealth CEO Ramah Luwalia believes that Silbert’s resignation was likely a voluntary move to improve the odds of the ETF approval, due to the SEC’s investigation into Silbert and DCG.

Adam Cochran, a partner at crypto venture capital firm Cinneamhain Ventures, speculates that Silbert’s decision to step down was likely “for sure an agreement” made between Grayscale and the SEC ahead of the conversion request being approved for the web 3.0 vs web 2.0 differences.

Cash Creation Model for Spot Bitcoin ETF

Grayscale’s amended S-3 filing revealed that the firm had “finally surrendered” to a cash creation model, as per Bloomberg ETF analyst Eric Balchunas. This is a point of contention between asset managers aiming to launch a spot Bitcoin ETF and the SEC.

The move was accompanied by the announcement that Mark Shifke, DCG’s CFO, would take over the role of chairman of the board at Grayscale, following Barry Silbert’s departure. This was noted in an 8-K filing to the SEC on December 26th.

The cash-creation model implies that new shares in a spot Bitcoin ETF can only be created or redeemed through cash transactions, a stark contrast to other stock and commodity-based ETFs, which use an in-kind model allowing fund market participants to directly handle the asset in the fund.

SEC Move to Track Bitcoin

The SEC’s decision to not allow broker-dealers to deal directly with Bitcoin has been perceived as a way to track the Bitcoin that is being exchanged and to minimize any potential risks related to money laundering or Know Your Customer compliance.

Scott Johnsson, general partner at VB Capital, said that even though the SEC stands for investor protection, the cash creation model could be a bigger threat to investors who want to gain exposure to Bitcoin through a spot ETF.

“Despite all other spot commodity ETFs operating with in-kind models, this must be done in a novel way via cash and it is uncertain if that will work,” wrote Johnsson.

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