The world’s largest digital currency asset manager is joining the move into bitcoin-linked exchange traded funds (ETFs) as bitcoin surges.
Grayscale Investment filed a Form 19b-4 with the US Securities & Exchange Commission to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin Spot exchange-traded fund (ETF), the company announced Tuesday. The filing is the first step in the conversion process for a self-regulatory organisation.
“We are proud to partner with NYSE Arca to submit today’s filing, folding Bitcoin into the familiar protections of an ETF wrapper, and ultimately providing investors with a choice in how they want to allocate their bitcoin exposure,” Grayscale Investments CEO Michael Sonnenshein said in a prepared statement.
Grayscale manages roughly $40bn (£29.9bn) on behalf of both retail and institutional investors, the company reported.
Opening the market
The move comes on the heels of the SEC allowing ProShares Bitcoin Strategy ETF to begin trading on the New York Stock Exchange by not objecting to the listing as of midnight 19 October. Other digital asset managers including 21Shares (in conjunction with Cathie Wood's ARK Invest) and Digital Galaxy (in conjunction with Invesco) are expected to follow suit.
Grayscale is petitioning the SEC to convert GBTC into a spot-price ETF, as opposed to the ProShares ETF, which tracks the more regulated futures market, which trades over the Chicago Commodities Exchange.
“At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset,” added Grayscale’s Global Head of ETFs Dave LaValle in the same release.
Share price movement
ProShares Bitcoin Strategy ETF opened trading Tuesday at $40.88 per share and moved to $41.22 in mid-morning trading on roughly 11m trade volume.
Grayscale Bitcoin Trust, which trades over-the-counter under the ticker GBTC, rose 2.95% in pre-market trading, opening at $47 versus Monday’s $45.65 closing share price.
More to come
New York-based Grayscale, which is also the Official Digital Asset Manager of the New York Giants, plans to petition the SEC to convert an additional 14 digital asset investment products into ETFs.
“GBTC proves that there’s strong investor demand for physically backed Bitcoin investment vehicles.
“As we file to convert GBTC into an ETF, the natural next step in the product’s evolution, we recognise this as an important moment for our investors, our industry partners, and all those who realise the potential of digital currencies to transform our future,” Sonnenshein said.
Bitcoin futures exchange-traded funds receive protections on par with other ETF products under the purview of SEC or Commodity Futures Trading Commission. However the SEC’s Investor Education section tweeted, “Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits.