Crypto asset manager Grayscale recently held a meeting with the Securities and Exchange Commission (SEC) to discuss the conversion of its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund (ETF). The meeting involved executives from Grayscale, as well as representatives from the Davis Polk law firm and the SEC's division of trading and markets.

According to a memo released by the SEC on November 20, the discussions revolved around NYSE Arca, Inc.'s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust under NYSE Arca Rule 8.201-E. Grayscale had also entered into a transfer agency and service agreement with BNY Mellon, which will act as the agent for the GBTC, facilitating the issuance and redemption of shares and maintaining shareholder accounts.

Bloomberg ETF analyst James Seyffart noted in a social media post that the SEC's trading and markets division holds the power to approve or deny proposed rule changes. While the agreement with BNY Mellon was seen as a necessary step, it does not indicate an imminent conversion of GBTC into an ETF.

The President of The ETF Store, Nate Geraci, shared his opinion that the most significant aspect of the meeting was the reference to the GBTC conversion as an "uplisting." He emphasized that this terminology does not imply any issues with the conversion to an ETF. Geraci believes that if Grayscale can "uplist GBTC to NYSE Arca on the same day other issuers launch spot BTC ETFs" and compete effectively on fees, the firm has a real chance to dominate this category.

Grayscale's efforts to convert GBTC into an ETF have gained attention as major asset managers like BlackRock and Fidelity also seek SEC approval for spot Bitcoin ETFs. Grayscale had previously submitted a Form S-3 registration statement to the SEC in October, expressing its intention to list GBTC shares on the NYSE Arca under the ticker symbol GBTC.

In October, a U.S. appellate court ordered the SEC to review its decision to deny Grayscale's conversion bid. Despite these developments, James Seyffart maintains his earlier prediction that the probability of ETF approval by January 10, 2024, remains at 90%.

As the discussions between Grayscale and the SEC continue, the crypto industry awaits further updates regarding the potential conversion of GBTC into a spot Bitcoin ETF.