Grayscale Planning To Convert Bitcoin Trust Into BTC-Settled ETF

Grayscale’s BTC Trust to be Converted into a BTC-settled ETF

On October 17, Silbert hinted at this possible plan to have the Grayscale Bitcoin Trust become a Bitcoin fund. The CEO was speaking in response to a tweet criticizing the cash-settled Bitcoin futures ETF that was recently approved by the US Securities and Exchange Commission (SEC).

Preston Pysh, a Bitcoin commentator criticizing the SEC’s latest move, asked Silbert whether Grayscale’s Bitcoin Trust would be converted into a Bitcoin-settled ETF. In his response, Silbert stated, “stay tuned,” hinting that such a product would soon be launched.

However, the possibility that the Bitcoin Trust would be converted into a Bitcoin fund did not go well with the fund’s investors. One Twitter user responded to Silbert’s comment where he asked how this change could affect those who have invested in Grayscale’s Bitcoin Trust.

“What happens to us Grayscale investors once the spot ETF is approved? Is our investment converted into ETF shares?”

the Twitter user asked. Despite both products offering indirect exposure to Bitcoin, a futures ETF is deemed a riskier product despite its regulations.

Move Fuelled by SEC’s ETF Approval

Speculations that Grayscale would soon explore a Bitcoin ETF began circulating on online platforms since last week after the SEC hinted at the approval of a Bitcoin futures ETF. Anonymous insiders from inside the investment firm stated that Grayscale was only waiting for the SEC to approve a Bitcoin ETF for such a product to be launched.

On October 15, a report stated that it had accepted the registration of a Bitcoin exchange-traded fund by ProShares Trust. However, unlike direct product ETF’s the ProShares Trust fund would be entirely future-based.

The approved ProShares ETF allows investors to gain exposure to contracts that speculates on the future price of Bitcoin. This product will be settled entirely on cash.

The SEC’s approval of a Bitcoin futures ETF has been attributed to the recent bullish rally in the primary cryptocurrency. However, the SEC has been criticized for the type of fund that the SEC has approved.

Instead of approving an ETF entirely settled on Bitcoin, the SEC stated that this fund would only have a cash-settled structure. This has created criticism where many players believe that the regulatory body should now approve a fund that is fully backed and settled by Bitcoin.

Grayscale is one of the leading asset management firms. The latest report from the investment firm as of October 15 stated that it had around $52.6 billion in assets under management (AUM).

Out of the entire firm’s asset holdings, 73% is held under the Bitcoin Trust, and investors who buy the Trust shares gain indirect exposure in Bitcoin. The financial report also shows that Grayscale’s Bitcoin fund comprises around 620,000 Bitcoin, equivalent to 3.3% of the total Bitcoin supply.

Before the SEC’s approval, Grayscale was the closest thing to a Bitcoin ETF in the United States. However, with the SEC approving ETF products, Grayscale needs to gain a competitive edge in this space, which will most likely be achieved with an ETF approval.

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