Leading voices in the crypto industry are optimistic that Grayscale, the major cryptoasset management firm behind the Grayscale Bitcoin Trust (GBTC), will be successful in getting the necessary approvals to convert the trust to a spot-based bitcoin (BTC) exchange-traded fund (ETF).
As reported this week, Grayscale has retained Donald B. Verrilli, a former Solicitor General of the United States, as additional legal counsel in the run-up to the due date for a decision by the US Securities and Exchange Commission (SEC) on its application to convert GBTC to an ETF.
“We want to ensure that we have the strongest possible team of legal minds ready to support our BTC ETF application,” the company said. It went on to describe Verrilli as “one of the nation’s most experienced attorneys,” and said he has “deep understanding” of administrative procedure and “the practical matters of working with the judiciary branch.”
The deadline for the SEC’s decision on the case is July 6.
The news that Grayscale had hired Verrilli as its legal counsel prompted optimism in the crypto industry, given his solid experience in working with US regulators.
“Strong move. Grayscale means business,” Jake Chervinsky, a lawyer and Head of Policy at the US-based Blockchain Association, said.
He added that there is “no doubt” that Grayscale’s application should be approved. “I don’t see how the SEC survives a legal challenge if not, especially one led by Don Verrilli. Mark your calendar,” the crypto-focused lawyer said.
The news was also picked up by Zhu Su, the co-founder and CEO of crypto hedge fund Three Arrows Capital, who simply called the move to hire Verrilli “powerful.”
Notably, the news comes as the industry outlet Law360 reported that “a number of top lawyers” at the SEC have left the agency over the past year.
According to the report, the departures are not only related to a hot job market for lawyers, but also due to frustration over SEC Chair Gary Gensler’s “aggressive enforcement tactics” and a “drive for more litigation and settlement penalties.”
“I was looking down the pipeline at the types of cases that the SEC is going to bring and not seeing a path toward victory on the SEC side,” one unnamed source who had left the SEC reportedly told the outlet.
In March this year, Grayscale’s CEO Michael Sonnenshein confirmed that his firm would consider a lawsuit under the Administrative Procedure Act if its ETF is denied by the SEC. “I think all options are on the table come July,” Sonnenshein said at the time.
If Grayscale is successful in converting its Bitcoin Trust to an ETF, it would become the first bitcoin ETF in the US that is backed directly by ‘physical’ bitcoin and not bitcoin futures contracts.
A potential approval is also believed to be a major catalyst for the price of bitcoin.
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