Grayscale To Convert GBTC Into Bitcoin ETF

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Grayscale To Convert GBTC Into Bitcoin ETF

Grayscale Investment has announced its intention to transform the Grayscale Bitcoin Trust (GBTC) into an ETF.

The news comes as GBTC premium has continued its downward trend into deeper negative territory since peaking at a 40% premium in late December 2020.

Until recently, GBTC was the only serious investment fund big institutional investors could use to gain exposure to Bitcoin, and its 2% management fee had little impact on any investor who wanted a regulated way of gaining exposure to Bitcoin.

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With the trust’s stringent lock-up period of 6 months, however, it means any other Bitcoin product that was more liquid and cheaper to trade, would likely impact GBTC.

Since hitting the highs of over 40% premium on 21 December, the premium has been on a continual trend downwards and moved into negative territory towards the end of February, and reached as low as -14.34% last month.

The decline has coincided with the launch of three Bitcoin ETFs in Canada, which are much cheaper, more liquid, and can be traded freely with no lock up period.

Grayscale Committed To Converting GBTC Into An ETF

The decline has surely woken the Grayscale team up, who say in a blog post that they are 100% committed to converting GBTC into a Bitcoin ETF.

‘Today, we remain committed to converting GBTC into an ETF although the timing will be driven by the regulatory environment. When GBTC converts to an ETF, shareholders of publicly-traded GBTC shares will not need to take action and the management fee will be reduced accordingly.’

It’s become apparent that the investment firm has applied before to convert GBTC into an ETF back in 2016 and 2017, but withdrew their applications after lengthy discussions with the SEC.

‘We withdrew our application because we believed the regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market,’ Grayscale said.

Back in 2016/17 the market certainly hadn’t matured enough, and with Jay Clayton at the helm, there was no chance a Bitcoin ETF would have been given the green light.

The Race For The First US Bitcoin ETF Is On

There was little to no institutional interest in Bitcoin back in 2016 so Grayscale missing out isn’t a surprise. Contrast that to now and institutional demand for Bitcoin is paramount.

And with Canada successfully launching 3 Bitcoin ETFs in Q1, it’s clear the demand for Bitcoin is everywhere.

Since Jay Clayton was stood down, there have been several other Bitcoin ETF proposals for the US, with investment giant Fidelity recently filing their own.

And with Bitcoin-friendly Gary Gensler expected to take over as chairman of the SEC as early as this month, we could see a Bitcoin ETF in American markets soon.

Will GBTC be the first Bitcoin ETF? The race is certainly heating up.


Please be advised that the contents of these posts are not to be construed as investment advice. While some of our contributors may be price analysts, their opinions and analyses are personal views and are shared with the intention of promoting discourse and understanding.

Always conduct your own research and consult with a professional financial advisor before making any investment decisions. The Bitcoin market can be volatile, and past performance is not indicative of future results. Invest at your own risk.

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