Traditional Finance ETF Applications Validates Crypto: Grayscale CEO

2 mins
Updated by Kyle Baird
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In Brief

  • Grayscale CEO, Michael Sonnenshein, states that traditional finance's creation of Bitcoin ETFs validates cryptocurrency.
  • Sonnenshein believes that the move to an ETF structure will provide investors with the additional protection they desire.
  • Despite SEC's block on converting GBTC fund to ETF, Sonnenshein maintains that this could unlock billions in investor capital.
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The chief executive of the world’s largest crypto fund manager, Grayscale, has said that traditional finance has validated the asset class. The comments follow a slew of crypto ETF applications from some of the largest asset managers on the planet. 

On July 12, Grayscale CEO Michael Sonnenshein told CNBC that traditional finance companies creating Bitcoin ETFs are a moment of validation for crypto. 

Crypto ETFs Validate Asset Class

Sonnenshein explained that the “ETF wrapper” is a tried and tested investment vehicle. He added that it had been the access point for so many different assets. 

“Bitcoin is an asset that is not going away and investors want access to it,” 

Moreover, he said that moving to an ETF structure will give investors the additional protection they want and need. 

He stated that BlackRock’s ETF application serves as a “moment of validation.” He then added, “Grayscale has weathered its third crypto winter, demonstrating the resilience of the crypto industry.”

“Literally the largest asset manager in the world publicly committing to advancing their crypto efforts only lends to the validity of the asset class and the staying power that it has.”

Last week, BlackRock CEO Larry Fink echoed the sentiment stating that its Bitcoin spot ETF will ‘democratize’ crypto. 

However, many industry observers have warned that traditional finance is trying to take control of the sector. This is being done with help from the SEC, which is crushing smaller businesses. 

Learn more about crypto derivatives: What are Perpetual Futures Contracts in Cryptocurrency?

When questioned about volatility and huge market drawdowns, he said that most traders view crypto as a long-term part of their portfolios. 

Sonnenshein also said that if Grayscale could convert its GBTC fund to an exchange-traded fund, it would unlock billions of dollars of investor capital.

Nothing Set In Stone Just Yet

However, the move is currently being blocked by the Securities and Exchange Commission. The regulator was described as a “turtle with a procrastination problem,” on CNBC.  

Grayscale has sued the SEC over its refusal to even entertain the concept of converting the fund. Earlier this week, a lawyer for the firm sent a letter to a US Circuit Court, challenging regulators’ ETF refusal.

The firm’s flagship fund, GBTC, has been trading at a massive discount amid the recent market turmoil.

However, the recent slew of ETF filings has decreased that discount from almost 50% in December to around -28% today, according to Coinglass

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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...
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