Grayscale Could Convert The Bitcoin Trust to an ETF, Investors Firmly in Support

Last updated: Mar 30, 2023
3 Min Read
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The U.S. Securities and Exchange Commission (SEC) has opened up a public discussion in regards to converting the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) and the feedback is overwhelmingly in support.

After years of not being able to get a spot Bitcoin ETF past regulators, the conversation has shifted to converting Grayscale’s Bitcoin Trust, the largest Bitcoin fund in the world, into its own ETF.

The SEC invited comments and feedback on the proposal to put GBTC on the New York Stock Exchange (NYSE), and have received many comments in favor of the idea. One commenter said:

"A $GBTC should be allowed to convert into an EFT. The rest of the world is watching. I'm a Proud Tax paying American Crypto is here to stay and has more way to KYC than the money laundering Banks. Thank you, Kenneth Kemp."

In a thread, Bloomberg’s ETF expert Eric Balchunas pointed out that the majority of comments are in favor of the proposal, from people using their real names, and are pointing out the contradiction of a futures ETF being okay but a spot ETF apparently being unacceptable.

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One commenter named William Perez reminded the SEC that it’s main goal was to protect investors. With that in mind, he made three made points:

“1. Right now my shares of GBTC are trading at a substantial discount to book value due to the fact that GBTC is not a spot ETF. ETF status will close the discount and keep the price closer to NAV.

2. I want to have direct ownership of Bitcoin via a spot ETF because I don't want to have full ownership rights and benefits take possession of the underlying asset. I don't want to buy gold coins that can be stolen - I want GLD ETF. I don't want to have to safeguard Bitcoin keys and worry about it being lost or stolen. Grayscale
Bitcoin spot ETF gives me safe ownership.

3. GBTC is not SEC-registered and it trades on OTC. I would feel more protected if we had GBTC as an SEC-registered Spot ETF.”

Many Bitcoin investors have taken issue with the fact that despite being brought in for the sake of investor protection, the ProShares Bitcoin Strategy ETF (BITO) has been consistently trading at a steep discount from spot BTC prices ever since its inception in November.

On-chain analyst Willy Woo speculated in October that should a Bitcoin futures ETF get approved, it would be “an expensive way to hold BTC,” adding that “The ETF effectively outsources the holding of BTC to hedge funds through a chain of profit incentives.”

At the time of writing, investors can grab Bitcoin at a 24% discount if they buy GBTC instead of spot BTC.

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