Grayscale Committed to Converting Bitcoin Trust to ETF

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In Brief
  • Grayscale says ETFs are the end goal for all its cryptocurrency trusts.

  • Grayscale is committed to converting bitcoin (GBTC) and ethereum (ETHE) trusts to ETF when the regulatory environment allows.

  • GBTC is the largest and bitcoin investment product in the world.

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In light of recent events positing the introduction of a bitcoin exchange-traded fund (ETF) in the U.S., Grayscale has reiterated that ETFs are the intended final products of its crypto trusts.

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Grayscale Investments has reaffirmed its commitment to converting its Grayscale Bitcoin Trust (GBTC) to an ETF. Grayscale highlighted that it pioneered providing investors with exposure to digital assets in the form of a security when it introduced GBTC in 2013.

It added that GBTC and the Grayscale Ethereum Trust (ETHE) are the only two crypto funds in the world that are SEC-reporting companies. The world’s largest digital currency asset manager noted that this is the model for all its crypto trusts.

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ETFs are the intended result

Grayscale explained that the lifecycle of each of its crypto trusts consists of four stages. First is launching the private placement of each trust. This is the state its five newest trusts are in.

Next, they obtain a public quotation on the secondary market. Four of its trusts are currently at this stage. GBTC and ETHE are currently in the third stage of becoming SEC-reporting companies. Finally, the intended results of all these trusts are to become ETFs.

Grayscale revealed that they first submitted an application for a bitcoin ETF to the SEC in 2016. These included talks for the better part of 2017. However, they ultimately withdrew their application because they believed the regulatory environment was not conducive enough for the product.

The investment company noted in the recent announcement that with its current positioning and engagement with the SEC, it would forego the need for a more formal application. Despite reaffirming its commitment, Grayscale gave no indication when it might convert GBTC to an ETF, citing the regulatory environment. 

However, Grayscale said that when GBTC converts to an ETF, shareholders would not need to take action.

Grayscale’s assets under management

Grayscale emphasized that GBTC is the largest and most liquid bitcoin investment product in the world. It said that compared with global commodity exchange-traded products, GBTC would rank second with $34 billion in AUM, behind only SPDR Gold Trust (GLD).

With $2.6 billion in weekly volume, it would rank third, behind only GLD and iShares Silver Trust (SLV). Grayscale recently updated its current AUM to $46.6 billion.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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