Barry Silbert Resigns as Grayscale Refiles Application for Bitcoin ETF

Grayscale has filed for converting Bitcoin trust namely GBTC into Bitcoin spot ETF. Grayscale recently amended S-3 filing with the Securities and Exchange Commission. However, Barry Silbert CEO of Grayscale resigned from his position as board member.

There are speculations that departure of Silbert can increase chances of Bitcoin spot ETF. Ramah Luwalia, CEO of Lumida Wealth, has noted that Silbert resigned at his own discretion to expedite the process of ETF approval.

He further noted that his decision was also influenced by an investigation by SEC regarding DCG. Adam Cochran, Cinneamhain Ventures executive noted that Silbert that the reason for Silbert’s departure was based on agreement between Grayscale and SEC during spot Bitcoin ETF discussions.

His resignation was also mentioned in 8-K filing with SEC on 26th December. Chief financial officer of DCG, Mark Shifke was nominated as the new chairperson of Grayscale board.

Changes in Grayscale’s Spot Bitcoin ETF Filing

At present various firms have filed for a Bitcoin spot ETF application with SEC. Since SEC has yet to approve a Bitcoin ETF application various firms have amended and resubmitted their application filings several times.

Bloomberg analyst Eric Balchunas that Grayscale amended the S-3 filing regarding on cash creation model. At present, there is an ongoing debate regarding cash and in-kind creations among firms that have filed for a Bitcoin spot ETF.

Stock and commodity-based ETFs are usually based on in-kind model that entails direct asset access. In contrast, cash-creation model means that shares issued by a spot Bitcoin ETF are only created or redeemed based on cash transactions.

Thus far, SEC prevented broker-dealers from working directly with Bitcoin to ensure transparency for Bitcoin transactions on exchanges and mitigating associated risks related to anti-money laundering (AML) and account verification checks. Scott Johnsson, executive from VB Capital retains that cash creation model entails greater risk for Bitcoin spot ETF investors.

Potential Risks Associated with Spot Bitcoin ETF

Coinbase shared two potential risks regarding Bitcoin spot ETF approval in a 19 December podcast. Two Coinbase executives and researchers namely Greg Sutton and David Duong recently talked about the concerns in question once a Bitcoin spot ETF is listed.

During a podcast discussion, the researchers said that launch may lead to supply crunch for institutions that are issuing the Bitcoin ETF.

He claimed that regulated spot ETF issuers have to purchase Bitcoin from regulated trading platforms. However, regulated firms may not have sufficient BTC supply to complete a massive purchase order during rising demand.

However, the analysts retained that such a scenario is also favorable in contrast to low inflows. As per Sutton, the second risk was regarding trading strategies employed by popular institutions namely basis trade. Basis trade entails leveraging difference between spot price and futures prices for the same asset.

On account of recent appreciation of Bitcoin spot and futures prices there is a 20% increase in basis trade revenues in the last 15 days as per data projections from Velo. As per the analyst, when institutional investors will increase Bitcoin acquisition for spot ETF basis could narrow lowering profitability ratio.

Bloomberg analyst James Seyffart recently noted that Grayscale arranged a meeting with SEC officials to emphasize in-kind redemptions rather than cash creation model.