Grayscale
Overwhelming support for Grayscale BTC Trust ETF conversion proposal
Investors air their thoughts as to why the SEC should approve the conversion of Grayscale’s BTC Trust into a spot ETF.
The U.S. Securities and Exchange Commission has allowed comments and feedback on a proposed rule change that would convert Grayscale’s Bitcoin Trust to a spot-based exchange-traded fund (ETF).
A notice of filing a proposed rule change to list and trade shares of Grayscale Bitcoin Trust as a spot-based ETF has generated a long list of comments with a large majority in approval.
Bloomberg’s senior ETF analyst Eric Balchunas had a look through some of the more recent comments on Feb. 15 observing that 95% are in favor of the proposed conversion.
Just glancing through the many comments from ppl to the SEC re converting $GBTC to an ETF and 95% are in favor of it and most using real names and pointing to the stupefying fact that futures ETF ok but spot not. eg: pic.twitter.com/j15iNYnh8R
— Eric Balchunas (@EricBalchunas) February 14, 2022
Several respondents to the SEC proposal argued that the regulator had already approved futures-based exchange-traded products so a spot-based product should logically come next. The U.S. risks falling behind other countries such as Canada which has already approved such investment products, others added.
A spot-based fund would be physically backed by the asset itself as opposed to backing by futures contracts from the Chicago Mercantile Exchange (CME) which is how existing Bitcoin ETFs operate.
Another comment pointed out that the current fund creates arbitrage opportunities that can take advantage of retail traders.
“The current structure of the closed end fund has led to price of the fund trading at a premium and discount to net asset value which has created arbitrage opportunities for more sophisticated traders to take advantage of unsuspecting retail investors.”
Grayscale’s Bitcoin Trust has been trading at a massive discount in recent months as investors speculate and hedge on the ETF being approved by the SEC. At the time of writing, the fund was trading at a discount of 24.75% according to Ycharts. This means that with BTC currently priced at around $43,600, the discounted fund price would be equivalent to around $32,500.
One investor said that he invested his life savings into the fund and is tired of the SEC trying to protect people, adding that the regulator is just out to “help the rich.” The financial regulator has repeatedly cited a lack of investor protection as a reason for delaying or rejecting crypto-based investment products.
Related: First US Bitcoin ETF a ‘dud’ in 2021 as GBTC discount stays near record lows
Grayscale originally hinted at converting the world’s largest BTC fund into a spot ETF in October. On Feb. 4, the SEC delayed the decision on the conversion of the $37 billion GBTC fund citing the same familiar concerns regarding manipulation, liquidity, and transparency.
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SEC again delays decision on Grayscale’s Bitcoin ETF
The Securities and Exchange Commission is once again inviting the public to comment on whether a spot Bitcoin ETF presents a material risk to investors.
The United States Securities and Exchange Commission (SEC) has once again delayed its ruling on whether to approve Grayscale’s application for a Bitcoin (BTC) exchange-traded fund (ETF), citing familiar concerns around manipulation, liquidity and transparency.
In a notice published Friday afternoon, the SEC expressed concerns about how the digital asset manager intends to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF. Namely, the regulator wasn’t convinced that Grayscale’s proposal was designed to prevent alleged fraud and manipulation in the Bitcoin market. The SEC has invited the public to comment on these issues, giving interested parties 21 days to respond in writing.
The SEC has just delayed their decision on whether GBTC can convert to a bitcoin ETF.
— Pomp (@APompliano) February 4, 2022
As Cointelegraph reported, Grayscale’s initial application to convert shares of GBTC into a spot Bitcoin ETF was submitted to the SEC in October. Less than two months later, the securities regulator announced that it was postponing its decision on Grayscale’s application and a similar proposal put forward by Bitwise.
Grayscale is the world’s largest digital asset manager with $36.5 billion in assets under management as of Feb. 4. Its GBTC product accounts for over 71% of its total assets.
02/04/22 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
— Grayscale (@Grayscale) February 4, 2022
Total AUM: $36.5 billion$BTC $BAT $BCH $LINK $MANA $ETH $ETC $FIL $ZEN $LTC $LPT $XLM $ZEC $UNI $AAVE $COMP $CRV $MKR $SUSHI $SNX $YFI $ADA $SOL $AMP pic.twitter.com/1IqNGLX3QP
Related: Canadian Bitcoin ETF sees its third-biggest daily inflow ever
While the SEC has been hesitant to approve a spot Bitcoin ETF, the regulator has been much more receptive to a futures-linked product. In October, the ProShares Bitcoin Strategy ETF became the first Bitcoin futures fund to be approved in the United States. Shortly thereafter, the SEC approved a pair of Bitcoin-linked Strategy ETFs from Valkyrie and VanEck.
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Grayscale added 25 tokens to those it is considering for investment products, and added AMP to its DeFi Fund while Coinbase listed four small projects.
Grayscale, the world’s largest crypto asset manager, has added 25 coins to the list of assets it is considering adding to its investment products including VeChain, Iota, Monero and Axie Infinity.
Other assets are consideration are: Algorand (ALGO), Arweave (AR), Bancor (BNT), BitTorrent (BTT), BORA (BORA), Convex (CVX), Cosmos (ATOM), Decred (DCR), Elrond (EGLD), Enjin (ENJ), Fantom (FTM), Gala (GALA), Gelato (GEL), Helium (HNT), Holo (HOT), Oasis Network (ROSE), Secret (SCRT), Spell (SPELL), Stacks (STX), The Sandbox (SAND), Universal Market Access (UMA), and Yield Guild Games (YGG).
In addition to the 25 coins added to its assets under consideration, Grayscale also said in a Jan. 24 update on its website that it had added Amp (AMP) to its Grayscale DeFi Fund.
We’ve updated our list of digital assets under consideration for 2022. See what's new, and learn more about what this means: https://t.co/GahLhJUgwk$ALGO $AR $ATOM $AXS $BORA $BTT $CVX $DCR $EGLD $ENJ $FTM $GALA $GEL $HNT $HOT $IOTA $ROSE $SCRT $SAND $SPELL $STX $VET $YGG
— Grayscale (@Grayscale) January 24, 2022
Grayscale’s current lineup of 15 crypto investment products has $55 billion in assets under management (AUM). The Grayscale Bitcoin Trust and Grayscale Ethereum Trust account for $31.2 billion of the AUM.
The Grayscale DeFi Fund currently has $7 million AUM and is down 35.8% since its inception in July 2021, according to data from Grayscale’s website.
Many of the coins now being considered are among the top 100 coins by market cap according to CoinGecko.
VeChain (VET) was originally launched as an ERC-20 token on the Ethereum network in 2015, but has since become the native token on the VeChainThor blockchain network. The token and the network is used by real-world industries for supply chain tracking and management.
Iota (IOTA) is the native token for the Iota distributed ledger which helps devices connect to the Internet of Things (IoT). The project was founded in late 2015.
Axie Infinity (AXS) is the governance token for the play-to-earn Axie Infinity game that has seen huge success in the past year. It traded for $0.97 with a $48 million market cap on Jan. 26 2021, and is now trading at $51.90 with a market cap of $3.6 billion.
While these three tokens are well known and have amassed large followings the same is not necessarily true for the tokens Coinbase has just added.
Coinbase is the third largest crypto exchange in the world with nearly $4 billion in daily trading volume and it listed four relatively unknown tokens today. The four coins are Cryptex (CTX), DIA (DIA), Maple (MPL), and Unifi Procol DAO (UNFI). None of these tokens currently crack the top 500 by market capitalization but by listing them Coinbase is staying true to its word to “make a lot more coins and tokens available in 2022” according to a Jan. 25 tweet.
The Cryptex team spoke with Cointelegraph today about their goals moving forward from the Coinbase listing. When asked how a small crypto project can benefit from such a listing, co-founder and CEO Joe Sticco said:
“It allows us to remain nimble and community driven, (at) the same time we can now reach all corners of the globe.”
Cryptex is a decentralized autonomous organization (DAO) that manages the TCAP Index, which tracks the total crypto market capitalization. CTX is up 10.7% in the past 24 hours trading at $10.79.
Related: New research expects a gloomy year for Bitcoin as DeFi and DAOs rise
Sticco also addressed what it would take for a small project to rise to the point where it would be considered by Grayscale for an investment product. He said,
“I think at the end of the day it’s not so much about where we all start… It’s about starting small and working to solve problems that are incredibly hard to make the future of finance the best it can be for all participants.”
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