Overwhelming support for Grayscale BTC Trust ETF conversion proposal

Published at: Feb. 15, 2022

The U.S. Securities and Exchange Commission has allowed comments and feedback on a proposed rule change that would convert Grayscale’s Bitcoin Trust to a spot-based exchange-traded fund (ETF).

A notice of filing a proposed rule change to list and trade shares of Grayscale Bitcoin Trust as a spot-based ETF has generated a long list of comments with a large majority in approval.

Bloomberg’s senior ETF analyst Eric Balchunas had a look through some of the more recent comments on Feb. 15 observing that 95% are in favor of the proposed conversion.

Just glancing through the many comments from ppl to the SEC re converting $GBTC to an ETF and 95% are in favor of it and most using real names and pointing to the stupefying fact that futures ETF ok but spot not. eg: pic.twitter.com/j15iNYnh8R

— Eric Balchunas (@EricBalchunas) February 14, 2022

Several respondents to the SEC proposal argued that the regulator had already approved futures-based exchange-traded products so a spot-based product should logically come next. The U.S. risks falling behind other countries such as Canada which has already approved such investment products, others added.

A spot-based fund would be physically backed by the asset itself as opposed to backing by futures contracts from the Chicago Mercantile Exchange (CME) which is how existing Bitcoin ETFs operate.

Another comment pointed out that the current fund creates arbitrage opportunities that can take advantage of retail traders.

“The current structure of the closed end fund has led to price of the fund trading at a premium and discount to net asset value which has created arbitrage opportunities for more sophisticated traders to take advantage of unsuspecting retail investors.”

Grayscale’s Bitcoin Trust has been trading at a massive discount in recent months as investors speculate and hedge on the ETF being approved by the SEC. At the time of writing, the fund was trading at a discount of 24.75% according to Ycharts. This means that with BTC currently priced at around $43,600, the discounted fund price would be equivalent to around $32,500.

One investor said that he invested his life savings into the fund and is tired of the SEC trying to protect people, adding that the regulator is just out to “help the rich.” The financial regulator has repeatedly cited a lack of investor protection as a reason for delaying or rejecting crypto-based investment products.

Related: First US Bitcoin ETF a ‘dud’ in 2021 as GBTC discount stays near record lows

Grayscale originally hinted at converting the world’s largest BTC fund into a spot ETF in October. On Feb. 4, the SEC delayed the decision on the conversion of the $37 billion GBTC fund citing the same familiar concerns regarding manipulation, liquidity, and transparency.

Tags
Etf
Bitcoin
Sec
Grayscale
Related Posts
SEC delays decisions on Bitwise and Grayscale’s Bitcoin ETFs
The United States Securities and Exchange Commission (SEC) continues to delay decisions on Bitcoin (BTC) exchange-traded funds (ETF), issuing two fresh deadline extension notices. On Dec. 15, the SEC postponed two major Bitcoin exchange-traded offering proposals, including NYSE Arca's "actual" Bitcoin ETF, named Bitwise Bitcoin ETP Trust, and Grayscale Bitcoin Trust’s Bitcoin ETF. The SEC now expects to decide whether to approve or disapprove, or “institute proceedings to determine whether to disapprove” Bitwise’s BTC ETF and Grayscale’s BTC ETF on Feb. 1 and Feb. 6, respectively. “The Commission finds that it is appropriate to designate a longer period within which …
Etf / Dec. 17, 2021
SEC again delays decision on Grayscale’s Bitcoin ETF
The United States Securities and Exchange Commission (SEC) has once again delayed its ruling on whether to approve Grayscale’s application for a Bitcoin (BTC) exchange-traded fund (ETF), citing familiar concerns around manipulation, liquidity and transparency. In a notice published Friday afternoon, the SEC expressed concerns about how the digital asset manager intends to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF. Namely, the regulator wasn’t convinced that Grayscale’s proposal was designed to prevent alleged fraud and manipulation in the Bitcoin market. The SEC has invited the public to comment on these issues, giving interested parties 21 days to …
Etf / Feb. 4, 2022
Grayscale CEO pleads Bitcoin spot ETF as SEC backs third BTC Futures ETF
Institutional investors rejoice, there is one more way to gain exposure to Bitcoin (BTC). The United States Securities and Exchange Commission (SEC) announced overnight the approval of a fourth Bitcoin futures exchange-traded fund (ETF). Fund group Teucrium is behind the most recently approved Bitcoin Futures ETF. The ETF joins a growing number of approved futures ETFs, complementing ProShares, Valkyrie, and VanEck Bitcoin Futures ETFs. Every Bitcoin spot ETF has been rejected to date, however, for one invested observer, the way in which the approval was made could be a boon for expectant spot investors. The plot thickens on the path …
Adoption / April 7, 2022
Grayscale reports 99% of SEC comment letters support spot Bitcoin ETF
Digital asset manager Grayscale reported overwhelming support in public comments for its application to launch a spot Bitcoin exchange-traded fund. In a Monday letter to investors, Grayscale said that of the more than 11,400 letters the United States Securities and Exchange Commission, or SEC, had received in regards to its proposed Bitcoin (BTC) investment vehicle, “99.96 percent of those comment letters were supportive of Grayscale’s case” as of June 9. According to Grayscale, roughly 33% of the letters questioned the lack of a spot BTC ETF in the U.S., given the SEC had already approved investment vehicles linked to Bitcoin …
Etf / June 27, 2022
Grayscale BTC Trust trades at a record 36.7% discount, but is it justified?
U.S. investors have been waiting for a Bitcoin exchange-traded fund (ETF) approval since May 2014 when the Winklevoss Bitcoin Trust filed an amendment request at the Securities and Exchange (SEC). Over the years, the SEC has rejected every applicant and the latest denial was issued to WisdomTree’s application for a spot Bitcoin ETF on Oct. 11. The SEC concluded that the offer did not have the ability “to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and rules.” Bitcoin investment trust vehicles have existed …
Etf / Oct. 15, 2022