Grayscale: Bitcoin ETF Approval Is a 'Matter of When, Not If'

Digital asset manager Grayscale continues to say it's just a matter of time before a Bitcoin ETF is finally approved.

That includes the possibility that the digital asset manager will get approval from the U.S. Securities and Exchange Commission to convert its Grayscale Bitcoin Trust (GBTC)—currently an open-ended trust available on the OTCQX Market—into a spot Bitcoin ETF. If converted to an ETF, the firm is aiming to have the fund listed on the NYSE Arca exchange.

And to that end, the firm asked Craig Salm, its chief legal officer, and Edward McGee, its chief financial officer, to address some common questions about the potential conversion.

“We believe that regulatory approval of a spot Bitcoin ETF in the U.S. is a matter of ‘when,’ not a matter of ‘if,'" Salm wrote in a company blog post today. Once approved, Grayscale “would immediately work with our partners to uplist GBTC to NYSE Arca,” he added.

But for every bullish Bitcoin ETF prediction, there's a caveat. Grayscale did not provide an expected timeline for GBTC’s conversion. “Timelines are inherently uncertain,” Salm said.

Some ETF analysts have offered educated guesses about when the SEC might make a decision on pending applications. Bloomberg Intelligence analyst James Seyffart said he expects to see some movement from the SEC between Monday, January 8 and Wednesday, January 10.

In 2022, Grayscale filed a lawsuit against the SEC, claiming the Commission had been unfair in refusing to accept an application to convert the Grayscale Bitcoin Trust into an ETF. Being an ETF would allow the fund to perform simultaneous creations and redemptions of shares to trade in line with Bitcoin's real-time price.

There's been signs that Grayscale has been making progress. For starters, a judge decided in August that the SEC does need to accept the firm's application. In October, it became clear the SEC wasn't going to file an appeal to the decision and was then ordered to officially review the ETF bid.

To that end, a memo published by the SEC revealed that the SEC met with Grayscale CEO Michael Sonnenshein and McGee last month to discuss "NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E."

Even without being a spot ETF, GBTC already accounts for more than 3% of the total BTC supply. It currently trades at an 8% discount to its net asset value. But as Salm pointed out in the Grayscale blog post, converting to an ETF structure would allow Grayscale to “more closely track the price of Bitcoin."

Edited by Guillermo Jimenez