Grayscale’s patience is wearing thin, and they’re not afraid to show it. In a recent letter to the SEC, Grayscale Investments expressed frustration over the prolonged delay in converting $GBTC to an exchange-traded product (ETP). 😡
Despite the SEC’s initial disapproval last year, the U.S. Court of Appeals overturned that decision, leaving Grayscale wondering why they’re still waiting.
Their Bitcoin Trust has been in limbo for almost three times the length the SEC is allowed to deliberate on such matters. And while they wait, Grayscale’s investors are feeling the pinch, with shares trading at a significant discount.
The company politely suggested that the SEC be aware of these three primary points on why the BTC ETF should be approved ASAP:
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The Cost of Waiting on NYSE Arca Listing 📉
Every day the Trust’s shares aren’t listed on NYSE Arca, Grayscale’s investors are taking a hit. Their shares are trading at a gut-wrenching discount to the net asset value. This wouldn’t be an issue if the Trust got the same treatment as those Bitcoin futures ETPs the Commission’s already given the green light to. Case in point: When the Court of Appeals issued its verdict, the discount narrowed by over 600 basis points. That’s a whopping $2 billion back into investors’ pockets in just one trading session. Yet, they’re still over $3 billion short of where they’d be if the Trust had ETP status. Ouch. -
The Ripple Effect on U.S. Investors 🌊
U.S. investors are in a bind. They’re looking for regulated Bitcoin investment avenues, but they’re being pushed into less efficient, more convoluted product structures. Why? Because the SEC’s been dragging its feet on approving spot-based ETPs like Grayscale’s. Every day of delay means Grayscale and its investors are losing out to Bitcoin futures ETPs. Just look at the day the Court of Appeals made their decision: a Bitcoin futures ETP saw net inflows skyrocket by over 800% compared to its 30-day average. Grayscale’s Trust could’ve been raking in that capital if it operated as an ETP. -
The Brewing Competition and the SEC’s Double Standards 🥊
Recently, the Commission’s desk has been flooded with Rule 19b-4 filings for proposed spot Bitcoin ETPs, all vying to outdo the Trust. Grayscale’s been vocal about these filings, highlighting they are proposing surveillance-sharing agreements with major U.S. spot Bitcoin trading venues. But here’s the kicker: the Commission’s approval orders for Bitcoin futures ETPs state that a deal with just the CME is enough. So, after the Court of Appeal’s reasoning, Grayscale’s calling out the Commission: Why the double standards for spot Bitcoin ETPs?
You can read the full letter here. 📖