Grayscale officially files SEC application to convert its Bitcoin fund into an ETF

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Grayscale officially files SEC application to convert its Bitcoin fund into an ETF By Hannah perez

The firm is putting its plans to launch an ETF in motion now that the SEC has already approved a first such fund. While GBTC’s premium remains negative, could an ETF be the solution?


With the approval of the first exchange-traded fund (ETF) of Bitcoin in United States, Grayscale is gaining optimism that regulators can approve the launch of a similar product.

Grayscale Investments, the world’s largest cryptocurrency fund manager, filed a request with the U.S. Securities and Exchange Commission (SEC) on Tuesday to convert its fund Grayscale Bitcoin Trust (GBTC) in an ETF. The movement officially launches the company’s plans to launch an ETF.

According to a release of the company, as part of the initiative, the stock exchange NYSE Arca filed a request to list the ETF proposed by Grayscale. However, for a public listing, the SEC must first give the green light to the firm’s proposal. The most recent request for Grayscale joins the list of more than 30 crypto ETF applications under review by the SEC.

Grayscale launches ETF plan

Grayscale It initially disclosed plans to convert its GBTC fund, as well as several of its other trusts, into an ETF in April this year. “We are 100% committed to converting GBTC into an ETFThe company wrote at the time in a press release. The firm added that it conceives the ETF as an evolution and the final status for its products.

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Launched in 2013, GBTC has become the investment vehicle of Bitcoin largest in the world, with assets under management of close to USD $ 40 billion. It has about 3.44% of all bitcoins in circulation, as indicated by the company.

Grayscale has admitted that it had initially conceived its product as an ETF. The firm first submitted an application for an ETF of Bitcoin in 2016 and claims to have spent most of 2017 in talks with regulators to finalize the plans. However, the company eventually withdrew the application after considering that the regulatory environment was not favorable.

More recently this year, the company has rebooted plans and has been working to get its ETF proposal approved by the SEC. As part of these efforts, Grayscale hired David LaValle in August as Global Head of ETF, the former CEO of the index provider in Allerian and once head of capital markets ETF at State Street.

The manager confirmed his intention on Monday this week, after the ETF’s approval of Bitcoin from ProShares, the first of its kind in the United States. The milestone has been conceived as a catalyst for the approval and launch of other similar investment products in the American market. And possibly Grayscale conceive that the movement changes the air towards a favorable outlook.

An optimistic outlook

However, unlike the ETF of ProShares, which is linked to futures of Bitcoin, plans Grayscale is launching a spot ETF, something the SEC has not quite agreed with. In the past, the Commission has raised concerns about possible manipulation of the spot cryptocurrency market, which is why it has rejected ETFs of this type.

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The president of the SEC, Gary Gensler, had already pointed out in this line that the regulator was more inclined to give the green light to exchange-traded futures funds, citing that such vehicles can confer greater protections to investors. The ETF of ProShares It began trading on the NYSE on Tuesday.

Gensler’s statements have motivated several analysts to think that the probability that Grayscale Get approved by a spot ETF from Bitcoin in the short term it is scarce. However, despite these headwinds, the company has been optimistic and maintains that If a regulator is comfortable with a derivative, they must also be comfortable with the underlying asset.

At Grayscale, we believe that if regulators are comfortable with ETFs holding futures for a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset.

GBTC Premium Still Negative, Is An ETF The Solution?

Despite the announcement of Grayscale and the debut of the first ETF of Bitcoin in the United States, the manager’s flagship product does not seem to be catching up on the news. According to data from Glassnode, the GBTC fund is currently receiving a 20.53% discount. The discount means that the market price of GBTC shares is more than 20% lower than its net asset value (NAV).

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According the website of Grayscale, each GBTC share is currently worth 0.00093509 BTC. This means that each Bitcoin per share was worth USD $ 57.44 at the close of the market on Monday. However, GBTC is actually trading at around $ 45.65.

GBTC allows investors to trade stocks in trusts that have large pools of Bitcoin. While this may be similar to an ETF, it differs in that such a product (ETF) offers the opportunity to invest in a fund that directly tracks the price of the underlying asset. Another important difference is that GBTC shares are created by Grayscale and they can be redeemed only after a set period of time.

GBTC shares began trading at a negative premium relative to the price of the Bitcoin underlying for the first time earlier this year. Since then, GBTC has been trading at a steep discount, resulting in losses for the trust’s existing investors due to the six-month lockdown for the initial investment.

There is a possibility that converting GBTC into an ETF to mitigate losses that has generated the product this year, as some analysts have pointed out. In any case, Grayscale now you must wait a period of 75 days to get a response from the SEC.

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Sources: CoinDesk, Decrypt, The Block, file

Hannah Estefanía Pérez’s version / DailyBitcoin

Image from Unsplash

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