Grayscale met with SEC officials to turn its Bitcoin fund into ETF

abdelaziz Fathi

Grayscale, the company running the world’s biggest bitcoin fund, has made a fresh attempt to win approval from the US regulator for its Bitcoin spot ETF proposal. The firm had reportedly met with the SEC commissioners to discuss turning its investment vehicle into a fund that trades on major Wall Street exchanges.

Grayscale

Per a CNBC report, Grayscale had privately filed a presentation with the Securities and Exchange Commission last week. The recent discussion aimed to better make its case for converting the massive Grayscale Bitcoin Trust, which owns bitcoin rather than contracts tied to its future price, into an ETF.

“Following a productive meeting, we remain encouraged by our ongoing engagement with the SEC. At Grayscale, we intend to maintain an open dialogue with regulators and policymakers as we look ahead to July 6,” a Grayscale spokesperson told CoinDesk.

Grayscale added that converting its flagship product into an ETF would “protect investors and the public interest, allowing the product to better track net asset value while giving investors the freedom to invest in Bitcoin in a safe and secure manner.”

In October, Grayscale Investments, a subsidiary of Barry Silbert’s Digital Currency Group, said it plans to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF. But the US Securities and Exchange Commission said it needs more time to consider the proposed rule change and any comments received.

GBTC shares trade at a discount

In response to the SEC’s procrastination, Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund. At one point last month, DCG’s flagship GBTC shares traded at a discount of 25% to net asset value (NAV).

The Grayscale Bitcoin Trust (GBTC), which owns 3.5 per cent of the world’s bitcoin, had traded at a substantial premium to NAV for much of its existence. However, it has continuously traded at a discount since the emergence of the first North American bitcoin ETF in Canada.

In the past six months, the discounts have grown bigger and updated its all-time high it hit earlier in May at 20%. Even in the months when Bitcoin price had recovered up to nearly $70,000, Grayscale has been slower to catch up.

GBTC is a closed-end fund with a six-month lock-up of initial investments, which means it cannot easily add or remove shares to deal with inflows and outflows. As a result,  the fund subscribers are unable for some time to redeem their shares in reaction to the spot price of bitcoin. Thus, its share price tends to trade at either a premium or a discount, rather than being tied to the underlying value of its assets.

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