Key Takeaways
Grayscale confirmed plans for a Bitcoin spot exchange-traded fund.
The fund will file an application convert its Bitcoin trust fund into an ETF.
Grayscale’s ambitions to launch a spot Bitcoin ETF may face resistance from the SEC.
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Grayscale confirmed plans of an exchange-traded fund (ETF).
Largest Bitcoin Fund Operator Plans ETF
Grayscale Investments confirmed it was planning to file an application to convert its Bitcoin trust offering to a Bitcoin ETF product.
A spokesperson for the company revealed that it decided to file for an ETF after the Securities and Exchange Commission (SEC), the top financial regulator in the U.S., greenlit the first Bitcoin ETF application filed by ProShares.
The approval of an ETF based on Bitcoin has been called a watershed moment for the crypto industry that will help legitimize the asset class among traditional investors. The authorized ETF product’s underlying value is tied to futures contracts on the Chicago Mercantile Exchange (CME) and is scheduled to launch tomorrow on the New York Stock Exchange.
In a Twitter thread, Jennifer Rosenthal, Communications Director at Grayscale, said the firm previously had been waiting for some formal indication from the SEC. “Today, I’m happy to confirm that Grayscale will file for GBTC to be converted into an ETF as soon as there’s a clear, formal indication from the SEC,” Rosenthal said.
Unlike the recent ETF filings tracking futures derivatives, Grayscale would aim at an ETF that is physically backed, also known as a spot ETF. If approved, it could be the first-ever spot Bitcoin ETF to hit the U.S. stock market.
Currently Grayscale allows investors to have exposure to Bitcoin through a private trust called Grayscale Bitcoin (GBTC) that issues shares traded on the US stock market. It has over $38.6 billion allocated to GBTC out of the total $52.6 in billion assets under management (AUM).
While GBTC has long been an important investment vehicle in the crypto space, it has drawbacks relating to its high costs of entry.
Because of the way GBTC’s product is structured, its shares often trade at a premium or discount. By moving to an ETF product, Grayscale aims to eliminate the price difference. Hence, Grayscale’s move to ETF would allow for better pricing and make Bitcoin exposure available to a wider class of institutional investors.
Rosenthal added it planned to file a specific document with regulators called a 19B-4 to convert their GBTC trust fund into an ETF next week. After the request, SEC should announce its decision in 75 days.
However, Grayscale’s ambitions to launch a spot Bitcoin ETF may face resistance from the SEC. The agency’s chairman, Gary Gensler, had earlier said that he was only comfortable with futures-based ETFs. According to Gensler, futures-based Bitcoin ETFs offer better investor protection.
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