Digital Assets: Grayscale Launches Solana Trust, Protests SEC Rejection Of VanEck Spot Bitcoin ETF

December 1, 2021 | Digital Assets, News
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The Grayscale Solana Trust is the sixteenth product from Grayscale Investments.

Grayscale Investments announced Tuesday the launch of the Grayscale Solana Trust to provide investors with exposure to Solana (SOL), the native token of the Solana network, a smart contract platform based on a decentralized blockchain that is claimed to be the fastest in the world.

Grayscale said in a statement that the single-asset Solana Trust is solely and passively invested in SOL. (Grayscale)

“For the last eight years, Grayscale has been at the forefront of offering investors efficient exposure to the ever-evolving digital currency ecosystem,” said Grayscale CEO Michael Sonnenshein. “We have had a front row seat to the mainstream acceptance and adoption of crypto, and increasingly find that investors are diversifying their exposure beyond digital assets like Bitcoin and Ethereum. Our family of Grayscale products will continue to expand alongside this exciting asset class, as we remain committed to offering investors opportunities to access the digital economy.”

Takes issue with SEC on spot bitcoin ETFs

One of the other digital asset products offered by Grayscale is the massive, $39.7 billion Grayscale Bitcoin Trust, which is quoted on the OTC market. In October, the asset manager filed with the SEC to convert the Grayscale Bitcoin Trust (GBTC) into a physical bitcoin ETF.

The firm applied on the same day that the first bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (NYSEArca: BITO) opened for trading.

GBTC is large enough that it holds 3.4% of the global bitcoin supply. Sonnenshein said at the time: “We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied, that we have the willingness to allow or clear the way for a Bitcoin futures ETF in the market, and also clear the way for a spot ETF.”

However, the SEC recently rejected a spot bitcoin ETF application by VanEck.

Fearing that the same grounds could be used to reject its own application, Grayscale has shot off a 15-page legal missive to the SEC via law firm Davis Polk & Wardwell LLP, arguing that it would be untenable for the regulator to deny its application to list the Bitcoin Trust (BTC) on the NYSE Arca.

“The Commission has no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not,” the letter said. “But having permitted the listing of multiple Bitcoin futures ETPs in the last several weeks, that is the policy decision the Commission would announce were it to deny NYSE Arca’s application to list BTC.”

Furthermore the letter said: “While permitting the listing and trading of Bitcoin futures ETPs without requiring any showing that investors in such products are insulated from the risks of fraud and manipulation in the underlying Bitcoin market, the Commission has continued to apply its vague and discretionary Section 6(b)(5) standard to deny listing approval to the spot Bitcoin ETPs pursuant to Rule 19b-4.”

“The Commission has not offered any meaningful explanation for its differential treatment of these competing products—and the irony that the successful ETPs invest in the very same CME futures market that has failed to qualify as a “significant market” in the Commission’s Rule 19b-4 analysis has gone unacknowledged.”

Related Story: Encouraged By BITO, Grayscale Files To Convert GBTC Into An ETF

Image credit: Solana

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