Grayscale Files with US SEC to Convert GBTC Into Bitcoin Spot ETF

Grayscale Investments LLC, the world’s biggest digital currency asset management firm, has filed with the U.S. Securities and Exchange Commission (SEC) to convert its Grayscale Bitcoin Trust (GBTC) into a physical or spot-based Bitcoin ETF.

Michael Sonnenshein, the CEO of Grayscale, made such an announcement in an interview on Tuesday, October 19, stating that the company is “100% committed to turning GBTC into an ETF as soon as U.S. regulators allow.”

“We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied, 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 move by Grayscale comes after the SEC approved the launch of a Bitcoin futures ETF to trade, with ProShares Bitcoin Strategy ETF beginning its trading on Tuesday.

Grayscale is aware of the conversion that would help the firm resolve persistent problems it has been facing in the past. Launching a physical Bitcoin ETF would solve the current less liquid option, Bitcoin fund (Grayscale Bitcoin Trust – GBTC).

The trading of a Bitcoin spot ETF would also address the trust’s discount as Grayscale, in many cases, has been selling Bitcoin below the net asset value. The GBTC’s price has traded below its underlying Bitcoin holdings for a prologued period because shares in the product can’t be destroyed in the same way as they are in an ETF.   

Also, Grayscale Bitcoin Trust may lose its relevance as the beginning of Bitcoin futures ETF’s trading threatens to draw assets away from a product that investors have tolerated because of the lack of an alternative.

In the past, Grayscale has frequently talked about its plans to convert its GBTC and its other 14 crypto trusts into ETFs.

As reported by Blockchain.News in July, Sonnenshein stated that he expects all of the fund group’s products to one day become ETFs as soon as regulations allow for such conversions.

Grayscale wants its ETF to be backed by actual units of the cryptocurrency, not just linked to it via derivatives contracts like the futures.

If the SEC approves the application, it could further expand the leading crypto trading as a recognized investable asset.

However, some analysts feel that the chances of Grayscale’s physical Bitcoin ETF getting approved soon is small, given that SEC chairman Gary Gensler has frequently signed his preferences for futures products that provide more protection to investors.

Grayscale looks forward to expanding its product offerings to make digital assets more accessible to both retail and institutional investors.

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