September 29, 2022

Grayscale names conversion of bitcoin trust to ETF a top priority

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Converting a GBTC bitcoin trust into an exchange-traded fund (ETF) is a top priority for Grayscale Investments. This was stated by the head of the investment company Michael Sonnenschein in an interview with Financial News.

The Grayscale Bitcoin Trust is the largest cryptocurrency fund in the world. According to the company, it manages assets worth more than $27 billion.

GBTC units are trading at a near 27% discount to its net asset value (NAV). The discount has been observed since March 2021. Since the fund’s quotes have fallen by more than 40%, bitcoin has lost about 15% in price. Not in the best way, the structure’s investors are also affected by the management commission of 2%.

Grayscale parent company Digital Currency Group (DCG) is looking to close the gap with NAV through share buybacks of cryptocurrency trusts.

According to Form 8-K, by March 2022, the organization had already spent $698 million to purchase GBTC units. But this did not lead to a visible result. That same month, DCG announced another $250 million share buyback program.

A possible solution to the problem is to convert the funds into spot ETFs that trade according to the market price of the underlying assets. However, this requires SEC approval.

Grayscale submitted an application to the regulator in October 2021. In February 2022, the SEC delayed its decision.

The commission has not yet approved any application to launch a spot bitcoin ETF. At the same time, the agency allowed the launch of traded funds based on bitcoin futures from VanEck and Valkyrie Investments, as well as ProShares.

Sonnenschein said the SEC will eventually “come to its senses.” The head of Grayscale also noted that the company is making significant lobbying efforts for this.

Recall that Grayscale admitted that the Commission violated the law when approving bitcoin futures ETFs.

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