By
Steve Muchoki
April 19th, 2024
Grayscale’s application for Bitcoin Investment Trust has recently been withdrawn by NYSE Arca exchange.
Grayscale Investments, LLC, a digital currency investing firm and official sponsor of the Bitcoin Investment Trust, announced yesterday that NYSE Arca exchange has withdrawn a request with the U.S. Securities and Exchange Commission (SEC) to list shares of the Bitcoin Investment Trust.
The application was an effort to facilitate digital currency trading for investors by allowing them to trade bitcoins as easily as stocks in the US.
Earlier in March, the SEC has already declined two similar applications for the exchange listing of cryptocurrency products, based on the SEC’s analysis of the current state of regulation of digital currency markets.
According to Grayscale’s investigation of regulatory developments in cryptocurrency markets, it is lacking in regulatory progress, so the approval of the application for Bitcoin Investment Trust seems impossible now.
In the words of Grayscale’s representatives:
“Although digital currency market regulation continues to rapidly evolve, at this time Grayscale does not believe there have been enough regulatory developments to prompt the SEC to approve the application.”
However, Grayscale plans to continue the dialogue with the SEC and to keep on monitoring regulatory developments in order to be ready for proceeding with an exchange listing for the Bitcoin Investment Trust when conditions become more favorable. Still, Grayscale does not make any forecasts about when this may happen.
However, the recent withdrawal of the public listing application will not affect the Bitcoin Investment Trust’s quotation on over-the-counter trading. The fund continues trading through approved brokers, which means that buying stakes is still possible.
The only drawback is that a public listing could increase the fund’s credibility and attract larger investors. But at the same time, this could be a problem as the fund’s premium to net asset value is much higher than the premium of most regulated funds, which means that the application’s approval could include mechanisms for reducing it.
The SEC explains the recent rejection of the public listing by stating that cryptocurrencies still remain rather risky, with lax KYC/AML requirements at some exchanges — notably China’s. Given the past month’s events in that country, it appears the Chinese authorities also agree.