Grayscale, the digital asset manager, continues to assert that it is only a matter of time before a spot Bitcoin exchange-traded fund (ETF) receives approval.
This includes the possibility that the US Securities and Exchange Commission (SEC) will approve to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
Currently, GBTC is an open-ended trust that can be found on the OTCOX Market. If the conversion gets the green light, Grayscale wants to have the fund listed on the NYSE Arca exchange.
The conversion
The chief financial officer of Grayscale, Edward McGee, and its chief legal officer, Craig Salm, answered some common questions regarding the potential conversion.
In a company blog post, Salm said that they believed the matter of a Bitcoin ET approval was now of ‘when’ rather than ‘if’.
He added that once the Bitcoin ETF approval is granted, the digital asset manager would work with its partners to get GBTC listed on NYSE Arca.
However, there is a caveat for every bullish prediction that has been made regarding the approval of a Bitcoin ETF.
Grayscale has not disclosed a timeline for the conversion of GBTC and Salm stated that the timelines were uncertain.
The decision
Educated guesses have been made by some ETF analysts about when a decision might be made by the SEC regarding the pending applications.
James Seyffart, an analyst for Bloomberg Intelligence, said that there would be some movement from the SEC on January 8th and 10th, Monday and Wednesday, respectively.
Last year, Grayscale filed a lawsuit against the SEC and claimed that it had been unfair for not accepting its application to convert its GBTC into an ETF.
If the fund is allowed to convert into an ETF, then it would be able to perform redemptions and creations of shares simultaneously for trading in line with the real-time price of Bitcoin.
There are signs that there has been some progress in the matter. In August, a judge declared that the SEC needs to accept the application of the digital asset manager.
The progress
It became apparent in October that the SEC did not intend to appeal the decision and it had been ordered to officially review the ETF bid.
The SEC published a memo, which revealed that last month, it had met with Michael Sonnenshein, the Grayscale CEO, and McGee.
The meeting had been related to the proposed rule change for listing and trading the shares of the GBTC on NYSE Arca Inc.
Even though GBTC is currently not a Bitcoin ETF, it still accounts for about 3% of the total supply of Bitcoin in the market.
Currently, the fund is trading at a discount of about 8% of its net asset value, which has been declining steadily.
However, Salm highlighted in the published blog post that once GBTC is converted into an ETF structure, it would be able to track the price of Bitcoin more closely.