The US Securities and Exchange Commission (SEC) has allowed comments on a proposed rule change that will transform the Bitcoin Trust from grayscale to an exchange-traded fund (ETF).
Notice of a proposed change to the rules for listing and trading of shares in the Grayscale Bitcoin Trust as a spot ETF generated a long list of overwhelmingly approved comments.
Eric Balchonas, chief analyst at Bloomberg ETF, reviewed some of the latest comments in February, noting that 95% support the proposed conversion.
Several respondents to the SEC proposal claimed that the regulator had already approved futures-based exchange-traded products, so a spot market-based product should be next. Others added that the United States risks falling behind other countries such as Canada, which have already approved such investment products.
The Spot Fund will in fact be backed by the asset itself, not by Chicago Mercantile Exchange futures contracts, as existing Bitcoin (BTC) ETFs work.
Another comment notes that the existing fund creates arbitrage opportunities that can benefit retailers.
“The current closed fund structure has resulted in the fund’s price being traded at a premium and discount to NAV, and creates arbitrage opportunities for more experienced traders to take advantage of unsuspecting retail investors.”
The Grayscale Bitcoin Trust has been trading at a huge discount in recent months as investors speculate and secure the Securities and Exchange Commission’s ETF approval. At the time of writing, the fund is trading at a 24.75% discount, according to Yharts. This means that with a current BTC price of around $ 43,600, the discounted fund will equate to around $ 32,500.
One investor said he put his savings in the fund and was tired of the SEC trying to protect people, adding that the regulator is working to “help the rich.” Finanstilsynet has repeatedly mentioned the lack of investor protection as the reason for the delay or abandonment of cryptocurrency-based investment products.
Related: First US Bitcoin ETF “Failed” in 2021 as GBTC Discount Remains Near All-Time Low
Initially, Grayscale suggested converting the world’s largest BTC fund into an ETF in October. On February 4, the Securities and Exchange Commission delayed a decision to convert the $ 37 billion GBTC fund, citing the same known concerns about manipulation, liquidity and transparency.