Three Grayscale Crypto Trusts Become SEC Reporting Companies

Divya  |  Sep 11, 2021

Digital asset manager Grayscale Investments revealed yesterday that three of its crypto-based products, Grayscale Bitcoin Cash Trust (BCHG), Grayscale Ethereum Classic Trust (ETCG), and Grayscale Litecoin Trust (LTCN), are now SEC reporting companies.

Three Grayscale Digital Asset Trusts Are Now SEC Reporting Companies

In an interview with Forbes, Grayscale CEO Michael Sonnenshein disclosed that the company had added three more products to its list of SEC reporting companies. They will join Grayscale’s Bitcoin (GBTC), Ethereum (ETHE), and Digital Large Cap Fund (GDLC) trusts, which are already compliant with the Securities Exchange Act of 1934.

“This is something that investors not only have expressed wanting, but something that we feel they deserve,” Sonnenshein told Forbes.

He added that the creation of SEC reporting companies enabled Grayscale to reach a wider audience of investors, who prioritize regulations when they’re considering investments.

Apart from the benefits that these trusts offer, the lockup period for their investments has been reduced from a year to only six months. Grayscale’s previous SEC reporting companies were given the same treatment during their transition. 

Grayscale’s Bitcoin Trust Faces Uncertain Future

It is well-known that Grayscale wants to convert its flagship offering -- Grayscale Bitcoin Trust (GBTC) -- into an exchange-traded fund (ETF) to stay ahead in the market. However, the firm hasn’t filed for the same with the Securities and Exchange Commission. 

Even if Grayscale manages to convert GBTC, which has over $30 billion in AUM, into an ETF, the product’s fate looks uncertain. 

Spot products came under questioning last month as SEC chair Gary Gensler indicated his preference for a futures ETF. In a public statement issued on August 3, Gensler said:

“I anticipate that there will be filings with regard to exchange-traded funds (ETFs) under the Investment Company Act (’40 Act). When combined with the other federal securities laws, the ’40 Act provides significant investor protections...I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded Bitcoin futures .”

Sonnenshein believes that the SEC should create “a level playing field” for both futures and spot-based products. During an interview with Forbes, he asserted that “it would be short-sighted or myopic of the SEC to be favoring products registering under one set of legislation over the other.”

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