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Grayscale
February 26, 2023March 2, 2023

Grayscale CEO Criticizes SEC’s Denial of GBTC Conversion to Bitcoin ETF

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The CEO of Grayscale Investments, Michael Sonnenshein, has criticized the US Securities and Exchange Commission (SEC) for denying Grayscale Bitcoin Trust (GBTC) approval as a spot Bitcoin exchange-traded fund (ETF) in June 2022, while approving Bitcoin futures ETFs. Sonnenshein argued that the SEC violated the administrative procedures act and acted arbitrarily. He explained that if GBTC were approved as a spot Bitcoin ETF, the fund’s net asset value would increase overnight, benefiting its investors. Sonnenshein also stated that Grayscale is suing the SEC and could appeal the case to the US Supreme Court. The SEC had denied Grayscale’s request based on concerns that the proposal did not sufficiently protect against fraud and manipulation.

Grayscale Investments is the world’s largest digital asset manager, with over $60 billion in assets under management. Its flagship product, GBTC, is a trust that holds Bitcoin and allows investors to gain exposure to the cryptocurrency without owning it directly. However, GBTC is currently trading at a discount to its net asset value (NAV), meaning investors are paying less for Bitcoin exposure than the underlying asset is worth.

Grayscale had applied for GBTC to be converted into a Bitcoin ETF, which would allow investors to trade it on exchanges like a stock. However, the SEC denied the request, citing concerns about fraud and manipulation. The agency has approved Bitcoin futures ETFs, which track the price of Bitcoin futures contracts traded on regulated exchanges.

Sonnenshein criticized the SEC’s decision, arguing that it violated the administrative procedures act, which requires agencies to follow certain procedures when making decisions. He also argued that the agency acted arbitrarily by approving Bitcoin futures ETFs while denying GBTC conversion.

If GBTC were approved as a spot Bitcoin ETF, it would trade at its net asset value, eliminating the discount or premium that currently exists. Sonnenshein estimated that this would immediately return a couple of billion dollars to investors.

Grayscale is currently suing the SEC over its decision and could appeal the case to the US Supreme Court if necessary. Sonnenshein emphasized that Grayscale has over a million investor accounts and that the firm is committed to doing the right thing for its investors.

In conclusion, Grayscale CEO Michael Sonnenshein criticized the SEC’s denial of GBTC conversion to a Bitcoin ETF, arguing that it violated the administrative procedures act and was arbitrary. He argued that if GBTC were approved as a spot Bitcoin ETF, it would benefit investors by eliminating the discount to its net asset value. Grayscale is currently suing the SEC over its decision and could appeal the case to the US Supreme Court.

Conclution:

The denial of Grayscale Bitcoin Trust’s conversion to a Bitcoin ETF by the US Securities and Exchange Commission has sparked criticism from Grayscale CEO Michael Sonnenshein. He argues that the SEC violated the administrative procedures act and acted arbitrarily by approving Bitcoin futures ETFs while denying GBTC conversion. Grayscale is currently suing the SEC and could appeal the case to the US Supreme Court. If GBTC were approved as a spot Bitcoin ETF, it would benefit investors by eliminating the discount to its net asset value. Grayscale is committed to doing the right thing for its investors and fighting for their best interests.

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