In a significant move towards launching a spot Bitcoin Exchange Traded Fund (ETF) in the US, Grayscale Investments has devised a novel strategy. The world’s largest digital asset manager recently revealed the establishment of Grayscale Funds Trust, a new trust structure in Delaware. This structure enables Grayscale to autonomously manage its 1940 Act products as it continues to expand its ETF business.
“The creation of Grayscale Funds Trust reflects our dedication to scaling Grayscale’s business responsibly,” stated Grayscale CEO Michael Sonnenshein. “We are putting the necessary foundations in place so Grayscale can continue creating and managing regulated, future-forward products.”
Expanding ETF Opportunities
Grayscale’s commitment to the development of ETFs is evident through its recent filing of a registration statement with the US Securities and Exchange Commission. This filing encompasses various notable ETFs, including a new Ethereum Futures ETF, a Grayscale Global Bitcoin Composite ETF, and a Grayscale Privacy ETF.
“Today’s filing demonstrates our continued commitment to offering investors innovative ways to access the digital economy and transformative technologies using a familiar, trusted, regulated investment vehicle: the ETF,” affirmed Grayscale Global Head of ETFs David LaValle.
The SEC has been reluctant to approve spot Bitcoin ETFs in the US due to concerns about the largely unregulated state of cryptocurrency exchanges where spot Bitcoin is traded. The SEC has expressed skepticism about the susceptibility of spot ETFs to fraud and manipulation. Previously, Grayscale had proposed converting its Bitcoin Trust (GBTC) into an ETF, but the SEC rejected this proposition in January.
Legal Battle with the SEC
Grayscale finds itself embroiled in a legal dispute with the SEC, challenging what it deems as the agency’s “illogical” and “fundamentally unreasonable” arguments against approving a spot Bitcoin ETF. Grayscale argues that any manipulation of spot Bitcoin prices would inevitably impact the value of Bitcoin futures and, consequently, the holdings of Bitcoin futures ETPs. A successful conversion of its Bitcoin Trust into an ETF could potentially help Grayscale address the significant discount at which it is currently trading relative to the actual Bitcoin price. As of Tuesday, the GBTC discount stood at approximately 37% according to YCharts.