Per a Securities and Exchange Commission (SEC) release, the Grayscale Bitcoin Trust (GBTC) has officially been noticed. Therefore, the process that could lead to a BTC-linked Exchange Traded Funds (ETF) by Digital Currency Group, Grayscale’s parent company, has begun.
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As Bitcoinist reported over a week ago, Grayscale introduced a petition to transform their GBTC into an ETF that would track Bitcoin’s spot price. The filing was made after the U.S. securities regulator greenlighted Proshares’ BTC ETF based on Chicago Mercantile Exchange (CME) futures contracts.
According to the document published by the SEC, the filing to turn GBTC into a Bitcoin ETF was made by NYSE Arca on October 19, 2021. Per the Commission’s own rules, it has requested comments from interested people on the filing.
The document also reveals that Coinbase Custody Trust Company will act as custodian for the investment product, in case of SEC approval. TradeBlock will provide the index used for the fund that would track Bitcoin’s price. The document adds the following:
The Sponsor expects that the market price of the Shares will fluctuate over time in response to the market prices of Bitcoin. In addition, because the Shares reflect the estimated accrued but unpaid expenses of the Trust, the number of Bitcoins represented by a Share will gradually decrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses.
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A Bitcoin Spot ETF And A Merry Christmas
Analyst Henry Jim reported the notice via his Twitter account. Per the Commission’s internal times, the GBTC turned Bitcoin ETF could be approved by December 24th, 2021.
This would certainly represent a Merry Christmas for the crypto market and the industry. The approval of BTC futures ETF was celebrated almost universally, but its detractors argued that the product is inefficient because it doesn’t track Bitcoin’s spot price.
Grayscale Bitcoin ETF 19b-4 filing “noticed” by SEC, starting clock for the conversion of $GBTC to an ETF.
First possible date for approval (barring SEC extensions) is Dec 24.
— ETF Hearsay by Henry Jim (@EtfHearsay) November 3, 2021
The U.S. SEC has received several Bitcoin ETF petitions but seems only willing to approve those based on CME futures. The Commission’s Chair Gary Gensler believes this product will provide investors with enough protection, according to his criteria.
This could reduce the chances GBTC chances to turn into a BTC ETF. However, two congressmen recently asked the SEC Chair to provide further explanation on his reasons to allow a BTC-linked ETF to futures and not spot.
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The government officials argued that the latter product offers more benefits to investors. In a letter addressed to Gensler, they claimed:
We question why, if you are comfortable allowing trading in an ETF based on derivatives contracts, you are not equally or more comfortable allowing trading to commence in ETFs based on spot Bitcoin. Bitcoin spot ETFs are based directly on the asset, which inherently provides more protection for investors.
As of press time, Bitcoin trades at $61,616 with a 2.4% loss in the daily chart.