Grayscale Seeks Investors’ Support to Make its Bitcoin Spot ETF Dream come True

On July 6, the SEC will say whether it has approved Grayscale's application to turn its flagship Bitcoin Trust into a spot ETF.

Grayscale, the asset manager running the world's largest bitcoin fund, met privately with the Securities and Exchange Commission last week in an effort to persuade the regulator to approve the conversion of its flagship fund into an ETF, CNBC has learned. That's because the trust, known by its GBTC ticker, has traded at an average 25% discount to the price of its underlying asset since early 2021, a discount that should disappear upon conversion, the company said. Meanwhile, Grayscale is trying to convince the U.S. Securities and Exchange Commission (SEC) to approve the conversion of its flagship product, the Grayscale Bitcoin Trust (GBTC), into a spot bitcoin ETF. GBTC currently has US$19.2 billion in assets under management.

The company recently had a private meeting with the SEC to discuss its application, according to CNBC. The asset manager told the regulator that turning its Bitcoin Trust product into an NYSE-traded ETF would broaden access to bitcoin and enhance protections while unlocking up to US$8 billion in value for investors.

So far, the SEC has not approved any spot bitcoin ETF. The deadline for the securities watchdog to either approve or reject Grayscale's application is July 6. "The SEC is discriminating against issuers by approving Bitcoin futures ETFs and denying bitcoin spot ETFs," Grayscale previously said.

Currently, in the absence of ETFs, products like Grayscale's Bitcoin and Ethereum Trusts offer investors regulated exposure to crypto through traditional investment platforms, with publicly quoted prices, legal counselors, and auditors. A crypto ETF would present a cheaper alternative to the management fees of crypto trusts. It would also help Grayscale repeg its Bitcoin Trust to the actual price of the underlying asset.