Grayscale appeals for community support with SEC spot Bitcoin ETF application

Grayscale is calling for assistance arsenic it attempts to get SEC support for a spot Bitcoin ETF.

Last October, the New York-based plus managers announced it had filed to convert its existing Grayscale Bitcoin Trust (GBTC) to a spot ETF. This filing came blistery disconnected the heels of the SEC’s support of the ProShares Bitcoin Futures ETF.

Commenting connected this, the Global Head of ETFs astatine Grayscale, Dave LaValle, reasoned that if the SEC is astatine easiness overseeing a BTC futures product, they should besides beryllium comfy with an equivalent spot-based product.

“At Grayscale, we judge that if regulators are comfy with ETFs that clasp futures of a fixed asset, they should besides beryllium comfy with ETFs that connection vulnerability to the spot terms of that aforesaid asset.”

The quality betwixt spot and futures comes down to the underlying asset. Real Bitcoin backs a spot-based ETF. In contrast, the futures-based ETF is backed by a derivative successful Bitcoin futures contracts.

The terms of Bitcoin futures contracts tin disagree from the existent marketplace terms based connected investors’ sentiment. This carries the hazard of inaccurate pricing, whereas nary specified hazard exists with a spot-based product.

As such, it’s arguable that a spot-based ETF is amended for investors and, if approved, would supply a beardown endorsement of integer assets.

What is the Grayscale Bitcoin Trust?

GBTC is simply a fiscal conveyance offering accredited investors a mode to put successful Bitcoin via the banal market. Investors bargain shares successful the trust; successful turn, the spot buys Bitcoin. As the BTC terms rises and falls, truthful excessively does the terms of GBTC shares.

GBTC has astir $24.3 billion successful assets nether absorption and 692.4 cardinal shares outstanding.

Its advantages see vulnerability to BTC without holding the asset, which is beneficial to those unwilling to woody with custody and safekeeping. As a regulated product, investors besides person regulatory protection.

However, the downside to investing successful GBTC is the precocious premium attached. The spot carries a 2% fee, and arsenic mentioned by MorningStar, it sometimes fails to way the terms of Bitcoin accurately. The upshot to this is investors whitethorn beryllium amended disconnected investing successful BTC directly.

“Both of these factors person led to ample differences betwixt the returns of the spot and the returns of Bitcoin itself.”

Participation matters

U.S ETF support has go a warfare betwixt providers and the SEC. Many firms person tried and failed to get support since 2013.

Although the SEC greenlighted the ProShares Bitcoin Futures ETF successful October 2021, a spot-based ETF has yet to beryllium sanctioned successful the U.S.

There could beryllium galore reasons for this. Firstly, it’s inactive unclear whether the existent U.S medication is for oregon against integer assets. Also, determination stay doubts implicit Bitcoin’s presumption arsenic a bona fide asset.

In immoderate case, arsenic portion of Grayscale’s filing process, the SEC opened a 240-day nationalist consultation play connected Tuesday. During this time, radical tin taxable their comments connected the matter.

Speaking to Bloomberg, Grayscale CEO Michael Sonnenshein said the SEC wants to perceive from investors, and successful an effort to rally support, Sonnenshein said information successful nationalist consultation matters.

Grayscale has acceptable up a dedicated webpage detailing their campaign. It contains a nexus to interaction the EC directly.