The conversion of the GBTC bitcoin trust into an exchange-traded fund (ETF) is Grayscale Investments’ top priority, according to CEO Michael Sonnenshein in an interview with Financial News.
“For us, as a company, this is priority number one. SEC has created an unfair playing field and forced investors to move to futures-based ETFs, as this is the only existing product,” Sonnenshein said.
GBTC shares trade at nearly a 27% discount to NAV. The discount has persisted since March 2021. Since then, the fund’s price has fallen more than 40%, and Bitcoin has lost about 15%. The 2% management fee is not helping investors either.
The parent company Grayscale — Digital Currency Group (DCG) — aims to close the NAV gap through buybacks of the cryptocurrency trusts.
According to Form 8-K, by March 2022 the organization had spent $698 million on GBTC shares. But this did not yield a visible result. In the same month DCG announced another $250 million share buyback program.
A possible solution is to convert the funds into spot ETFs that trade in line with the market price of the underlying assets. However, this requires SEC approval.
Grayscale submitted the corresponding filing to the regulator in October 2021. In February 2022 the SEC delayed a decision.
The Commission has not approved any of the applications to launch a spot Bitcoin ETF. Meanwhile the agency allowed the launch of spot Bitcoin ETFs based on futures from VanEck and Valkyrie Investments, as well as ProShares.
Sonnenshein said that, in the end, the SEC will come around. The Grayscale chief also noted that the firm is mounting substantial lobbying efforts to this end.
“It’s a matter of when, not if,” he concluded.
As reported, Grayscale indicated that the Commission violated the law when approving the futures-based Bitcoin ETF.
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