The institution behind the world’s largest bitcoin fund, Grayscale, visited the SEC in private to urge the regulator to approve the conversion of its flagship fund into an exchange-traded fund (ETF).
In a 24-page presentation, Grayscale stated its intentions to convert the fund to increase access to bitcoin and improve security while unlocking up to $8 billion for investors.
According to a CNBC report, the explanation behind the anticipated increase in value is linked to the fact that GBTC constantly trades at a 25% discount to bitcoin’s underlying asset. This discount, according to Grayscale, would vanish if the fund was turned into an ETF.
Grayscale has been at odds with the SEC since April of last year when the company filed with the SEC to convert the fund into an ETF.
However, Grayscale has seen the SEC accept futures-based ETFs from providers such as ProShares based on bitcoin, while spot ETFs focused on bitcoin stay neglected.
The presentation noted, “The SEC is discriminating against issuers by approving Bitcoin futures ETFs and denying bitcoin spot ETFs.”
A spot bitcoin ETF, as per Grayscale, is no riskier than a futures-based ETF because the two markets are both influenced by the underlying price of bitcoin and closely track each other.
Grayscale aided in the planning of a public letter-writing campaign, which resulted in the SEC receiving over 3000 letters in support of its ETF application. If its application is denied, Grayscale has threatened to sue the SEC.
After a lot of such applications from competitors were denied since November, most analysts aren’t optimistic for SEC clearance.
The SEC is concerned about the possibility of fraud and manipulation in bitcoin markets and has stated that a spot-based application will not be approved until global exchanges are regulated properly.
The SEC has until July 6 to approve or reject Grayscale’s application.
