Grayscale Met Privately With SEC To Talk Bitcoin Spot ETF Transition
Grayscale had a private meeting session with the SEC to present how the spot ETFs are no riskier than futures ETFs, according to report.
World’s largest Bitcoin fund, Grayscale, held a private meeting with the U.S. Securities and Exchange Commission (SEC) last week. The fund manager was making a case that the watchdog should approve the applied transition into a Bitcoin Spot ETF to unlock over $8 billion in value for its investors.
According to CNBC report, Grayscale’s presentation argued that a Bitcoin spot ETF would be “no riskier than a Bitcoin futures ETF”. The fund manager made a case to SEC that both spot and futures markets are influenced by the same inputs, due to their significant overlap in constituents and tightly correlated prices.
Grayscale currently holds over 640,000 Bitcoin on behalf of over 850,000 US accounts. Their holdings represent around 3.4% of Bitcoin’s total supply, worth $19 billion at the time of writing.
The fund provides a way for firms like Cathie Wood’s Ark Invest to gain price exposure to Bitcoin. But, the technicals of the fund are different from those of exchange-traded funds, causing it to track the price of Bitcoin less accurately.
Right now, Grayscale’s actual trust, GBTC, trades at a 25% discount to its underlying Bitcoin holdings. According to Grayscale, this discount will disappear upon conversion into an ETF, which in turn would bring huge value to current investors.
SEC & Bitcoin Spot ETF
Grayscale has long been campaigning to transition its fund. The SEC has been very hesitant to approve a Bitcoin spot ETF, over fears of market manipulation. Equivalent bodies in other countries have taken a different stance.
Regardless of the SEC’s reluctance to approve Grayscale’s application, the company has been extremy resiliant and continues to pressure the regulator to grant permission for its spot ETF conversion. Grayscale has also encouraged its investors into sending over 3,000 letters in the SEC’s direction to support its application, even threatening with lawsuits, if they don’t.
According to Grayscale CEO Michael Sonnenshein, the SEC has failed to treat two similar products alike between futures ETFs and spot ETFs. Therefore, if the commission at the end rejects Grayscale’s application, it may be liable for an Administrative Procedure Act violation.
