Grayscale Curries Public Favor For Spot Bitcoin ETF

Public Comments for Spot Bitcoin ETF Application

In a tweet thread by Grayscale on Tuesday (February 22, 2022), CEO Michael Sonnenshein announced the launch of an advocacy campaign soliciting investors in the United States to convince the SEC of the importance of having a spot Bitcoin ETF.

Grayscale first filed an application with the American securities regulator in October 2021 to convert its Grayscale Bitcoin Trust (GBTC) – the world’s largest BTC fund – to a spot Bitcoin ETF. The filing came on the same day the SEC approved ProShares futures-backed Bitcoin ETF, the first of such products in the U.S.

In December 2021, the SEC extended the deadline to decide on Grayscale’s application. Later in February 2021, the Commission called for comments on the proposal.

According to Sonnenshein, “this campaign aims to educate and inspire the investment community to take action and make their voices heard on this historic decision.” The SEC received nearly 200 letters from investors a few days ago asking the Commission to approve Grayscale’s application request.

At this time, the Grayscale CEO said that most of the letters shared “have been echoing what we at Grayscale have been articulating for quite some time and continue to do so today — that investors have been patient and deserve a spot Bitcoin ETF.”

On the other hand, the SEC has been reluctant to approve an ETF product with direct exposure to Bitcoin, citing market manipulation and volatility among its reasons. The Commission already rejected spot Bitcoin ETF proposals from Fidelity, Kryptoin, and Valkyrie, while delaying NYDIG’s application till March 2022.

Grayscale’s Ambitious Crypto ETF Plans

Converting GBTC to a spot ETF is only part of the crypto asset management giant’s overall ETF agenda. As part of its plans, the company even hired David LaValle to lead its global ETF efforts. Earlier in February, the company launched its Grayscale Future of Finance ETF under the GFOF ticker. The ETF tracks the firm’s joint index developed in partnership with Bloomberg called the Bloomberg Grayscale Future of Finance and Index.

The index tracks a total of 22 companies described as being at the forefront of the emerging financial landscape. Details of the filing from earlier in the month show that the index offers indirect exposure to several crypto-linked equities across market segments like mining, asset management, and exchange platforms among others.

Grayscale’s ETF will, however, not track crypto equities associated with companies involved in the manufacture of chips for mining as well as firms that provide payment processing services.

As Grayscale expands its ETF plans, the company is entering into direct competition with other companies that are delivering ETFs that track crypto-linked equities. With virtual currencies known for volatile price action, these investment vehicles often provide indirect exposure for institutional investors that may not want to deploy funds directly in the spot market. Currently, firms such as Valkyrie and Bitwise have also launched cryptocurrency-linked securities funds.

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