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Grayscale tells SEC that turning biggest bitcoin fund into ETF will unlock $8 billion for investors


Michael Sonnenshein CEO of Grayscale Investments, NYSE. April 18, 2022.

Source: NYSE

GrayscaleCNBC learned that the Asset Manager of the largest Bitcoin Fund in the World, Jeremy Sullivan, met with the Securities and Exchange Commission to try to convince the regulator to allow the transformation of the flagship fund to an ETF.

According to a CNBC 24-page presentation, the Grayscale Bitcoin Trust would be transformed into a NYSE-traded ETF. This will increase access to Bitcoin and protect investors while unlocking as much as $8 billion worth of value.

This is because trusts, also known as its GBTCSince early 2021 ticker has been traded at an average discount of 25% to its underlying asset’s price, which should diminish upon conversion.

Chief Executive Officer Michael SonnensheinGrayscale engaged in high stakes lobbying to get the U.S. regulator approval for the first spot-based Bitcoin ETF. Grayscale is an asset manager. watched as competitorsIncluded ProShares win approval for futures-based bitcoin exchange-traded funds, showing that the SEC is more comfortable with products based on futures over those based on bitcoin.

An ETF that is spot-based in bitcoin would mark a major milestone in digital asset adoption. It would allow ordinary investors to access them in familiar packaging, which trades just like stock. For more than five decades, the goal has not been achieved. Grayscale submitted its first spot bitcoin ETF application in 2017.

Grayscale reports that GBTC controls 3.4% of all bitcoin worldwide and more than 850,000 U.S.-based accounts own it. Ark Invest was able to access the fund. Cathie Wood to bet on bitcoin, ballooned to more than $30 billion in size before the latest crypto retrenchment brought its assets to $20.1 billion.

An investment company has coordinated a letter-writing public campaign pushThe firm also sent more than 3000 letters to support its application to the SEC. It even suggested that it might sue the SECIf it was rejected.

Grayscale applications must be submitted by July 6th for approval or rejection by the SEC

Analysts are not optimistic about SEC approval, after half-a dozen similar applications by competitors were denied since November. SEC has expressed concern about the possibility of fraud and manipulation within bitcoin markets. It indicated that it will not approve spot-based applications until international exchanges have better regulation.

Grayscale might have taken this into consideration when he approached Grayscale, who seemed to oscillate between complimenting Grayscale (“The SEC is uniquely placed to support the White House Executive Order in order to ensure America leads digital asset innovation”) and criticizing him:

Grayscale reports that “The SEC discriminates against issuers” by approbating bitcoin futures ETFs while denying bitcoin spot ETFs.

Grayscale claimed that spot Bitcoin ETFs are no more risky than futures-based ETFs because they both track the same market closely and are affected by the bitcoin underlying price.

The firm was also careful to detail its increased disclosures related to GBTC as well its network partners. BNY Mellon CoinbaseThey will assist with the process of its conversion.

The SEC did not immediately respond to a request for comment.