After several attempts in previous years, Grayscale renewed his pressure to issue a fund listed in the US asset markets. The two funds, GBTC and ETHE, are shortlisted as full ETFs, according to Monday’s roadmap. However, the company has not reported any specific efforts, such as filing a new application with the SEC, nor has it provided a useful timeline for these plans.
Grayscale is one of the main providers of cryptocurrency transactions in the traditional markets, and it manages several large cryptocurrency mutual funds. This money contains cryptocurrencies such as Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and many other currencies, and it also contains stocks that are expected to reflect the value of the underlying asset.
According to Grayscale’s Roadmap, each trust is divided into four development categories. The first is the “private placement” stage, when the funds are available for sale and purchase only through OTC transactions with the company.
The second category is stocks listed on the secondary market. This means that trust funds get an index and are sold to the public. Bitcoin Cash, Litecoin (LTC), and Ethereum Classic (ETC) trust funds fall into this category. Finally, the more advanced institutions gain “SEC Reporting” status by committing to regularly disclose their budgets and transactions to the Securities and Exchange Commission. At the moment, only Bitcoin and Ethereum trust funds report to the Securities and Exchange Commission (SEC).
The last and most sought-after position is the ETF, which is a fully regulated and liquid fund. ETFs are often used to access indices or asset baskets in the US stock markets. ETFs tend to charge lower administration fees, achieve broader coverage of trust, and are designed to track net worth very carefully. Grayscale products are particularly weak in this regard, as GBTC consistently trades at a very high premium for the bitcoin value it holds.
GBTC’s premium recently collapsed into a fine and is currently trading 10% below Net Asset Value. The loss of the award, coupled with fierce competition from Canada’s Purpose Bitcoin ETF, may have pushed the gray tones into action.
The Bitcoin ETF promise has been one of the driving ideas behind Bitcoin since around 2017, when Grayscale first attempted to introduce an ETF to the SEC. Regulators have consistently rejected these apps, often citing the unregulated nature of the Bitcoin infrastructure as a major obstacle to overcoming it. The Bitwise implementation of the Bitcoin ETF was one of the reasons for the publication of its 2019 Volume Report, which claimed that up to 90% of declared volume does not actually exist. This argument was used by the company to claim that bitcoin pricing primarily occurred on regulated exchanges, but this did not convince the regulators at the time.
Bitcoin ETF requests will continue to flow from companies like VanEck, WisdomTree, and SkyBridge in 2021 and will now also revert to shades of gray. Given its long history of failures, the company secured ETF pledges, stating that “timing will be determined by the regulatory environment”. Institutional recognition and infrastructure has made great strides since Grayscale’s last attempts, although it remains unknown if this will ultimately affect SEC acceptance of its first application.