17 April 2021
Amid the booming race for the title of America’s first Bitcoin exchange-traded fund (ETF), the US-based investment giant Grayscale revealed that launching such a product was the firm’s plan all along.
“Grayscale first submitted an application for a Bitcoin ETF in 2016 and spent the better part of 2017 in conversations with the SEC. Ultimately, 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,” the firm noted.
In a blog post titled “Grayscale’s Intentions for a Bitcoin ETF,” the company explained that each of its trusts has a particular life cycle that can turn into an ETF in the final stage. For instance, all Grayscale’s publicly traded crypto trust started with the launch of private placement; through this method, sales of stock shares or bonds are available to pre-selected investors and institutions only.
After this stage, the trusts then seek a public quotation on secondary markets allowing exchanges to provide information on their shares, including their bid and ask price, last traded price, and volume sold. Grayscale’s Bitcoin Cash Trust, Litecoin Trust, Ethereum Classic Trust, and Digital Large Cap Fund are currently at the stage of public quotation.
The third stage of Grayscale trusts’ life cycle is becoming regulated by the Securities and Exchange Commission (SEC). To date, only two of its investment trusts, such as Grayscale Bitcoin Trust and Grayscale Ethereum Trust, have reached this stage.
Finally, each product’s ultimate goal is turning into an ETF, offering a special type of securities that track the prices of specific underlying assets. In particular, crypto-based ETFs enables institutional investors of getting exposure to digital assets’ price volatility without actually holding any cryptocurrencies. ETFs are also freely tradeable on traditional exchanges.
“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,” the firm concluded.
Other Major investment companies such as Fidelity Investments, SkyBridge Capital, and VanEck have recently filed their Bitcoin ETFs applications with the SEC. However, the regulator has declined various similar proposals over the past few years, leaving the niche vacant so far, CryptoSlate reported.
Disclaimer: The author’s views and opinions are for informational purposes only and do not constitute financial, investment, or other advice.