After several attempts over the past few years Grayscale has renewed its momentum to launch an exchange-traded Bitcoin fund in the U.S. asset markets. According to a roadmap on Monday, two of its funds, GBTC and ETHE, are on the shortlist to become eligible ETFs. However, the company has not specified specific efforts, such as filing a new filing with the SEC, nor has set material deadlines for these plans.
Grayscale is a leading provider of cryptocurrency risk in traditional markets and operates several trust funds for major cryptocurrencies. These funds hold cryptocurrencies like Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and many others, and issue stocks that are expected to reflect the value of the underlying assets.
According to the grayscale roadmap, each trust fund is divided into four development categories. The first phase is the “private placement” phase, during which the funds are only offered for sale and purchase in OTC agreements with the company.
The second category concerns stocks that are publicly traded on secondary markets. This means that trust funds will receive a ticker symbol and become publicly negotiable. Bitcoin Cash, Litecoin (LTC), and Ethereum Classic (ETC) trust funds fall into this category. at last, The most advanced trusts achieve “SEC filing” status and are required to regularly disclose their balance sheets and operations to the Securities and Exchange Commission. Currently, only Bitcoin and Ethereum trusts report to the SEC.
Its most recent and coveted status is that of an ETF, a fully regulated, liquid fund. ETFs are commonly used to expose themselves to indices or baskets of assets in the US stock markets. ETFs generally have lower management fees, reach greater reach than trusts, and are designed to closely track your net asset value.. Grayscale’s products are particularly weak in this regard, as GBTC has always traded at a very high premium over the value of the Bitcoin it held.
GBTC’s premium recently collapsed into a penalty and is currently trading 10% below net asset value. Losing that premium combined with stiff competition from Purpose Bitcoin ETF in Canada, Grayscale may have put into action.
The promise of a Bitcoin ETF has been one of the driving forces behind Bitcoin since around 2017 when Grayscale first attempted to file for an ETF with the SEC. Regulators have consistently denied these requests, often citing the unregulated nature of Bitcoin infrastructure as the main hurdle to overcome. Bitwise’s application for a Bitcoin ETF was one of the reasons behind the publication of its report on trading volume in 2019, which claimed that up to 90% of the reported volume was in fact absent.. The company used this argument to claim that most of Bitcoin’s pricing took place on regulated exchanges, but this did not convince regulators at the time.
A number of Bitcoin ETF filings from companies like VanEck, WisdomTree and SkyBridge will continue through 2021, and Grayscale is back too. Given the long history of pushbacks, the company has kept its ETF pledge by stating that “the timing is dictated by the regulatory environment”. Institutional adoption and infrastructure have come a long way since Grayscale’s last attempts, although it is unknown if that will ultimately lead the SEC to accept its first application.