Grayscale Files to Turn Its Bitcoin Fund Into A Spot ETF

Grayscale – the world’s largest Bitcoin fund – recently filed to turn their company into a Bitcoin spot ETF. This comes shortly after ProShares’ Bitcoin Futures ETF began trading on the New York Stock Exchange (NYSE) earlier today. If approved, Grayscale’s fund would become the first Bitcoin Spot ETF in the United States.

Will the SEC Approve?

As reported by Bloomberg, Grayscale’s filing would flip its $40 billion Bitcoin Trust (ticker GBTC) into an ETF. Michael Sonnhenshein, CEO of Grayscale, says his company is “100% committed” to such a transition. However, they will first need permission from the Securities and Exchange Commission (SEC).

The SEC has been reluctant to approve almost all Bitcoin ETF applications in the United States. Though the ProShares’ Bitcoin ETF began trading today, it merely trades in Bitcoin Futures contracts rather than direct BTC.

Gary Gensler – Chairman of the SEC – proved more tolerant of Futures ETF applications leading up to ProShares’ approval. He maintains that a Futures ETF will provide better investor protection because it trades on the Chicago Mercantile Exchange.

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Meanwhile, the chairman is yet to show similar confidence in aspects of a spot traded fund. Earlier this month, the commission delayed approvals for four Bitcoin ETFs– three of which were spot-based.

However, CEO Sonnhenshein remains confident that a Spot Bitcoin ETF is around the corner, given the recent approval of ProShares.

“We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied,” said Sonnhensein, “that we have the willingness to allow or clear the way for a Bitcoin futures ETF in the market, and also clear the way for a spot ETF.”

The Impact of Bitcoin ETFs

By converting into an ETF, Grayscale would avoid the discount problem present in its current fund. Its price has consistently traded below Bitcoin’s actual value. This is due to its inability to destroy shares in the fund, unlike an ETF. Additionally, converting into an ETF will allow it to compete with the plethora of Futures-based ETFs likely to launch soon.

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Many influential voices in the Bitcoin community believe the current futures ETF is inferior to a potential spot product. Global Macro Investor CEO Raoul Paul stated that it will cause investors to lose significant profits in fees. Others contest that these fees will generate sell pressure on Bitcoin, thereby lowering its price.