In brief

  • Galaxy Digital’s Mike Novogratz criticized the SEC for allowing the Grayscale Bitcoin Trust (GBTC) to function in the absence of approving a true Bitcoin ETF.
  • His firm is one of several hoping to launch a Bitcoin ETF in the US, allowing investors to gain exposure to the cryptocurrency.

Galaxy Digital is one of several financial firms aiming to launch a Bitcoin exchange-traded fund (ETF) in the United States, pending approval from the US Securities and Exchange Commission (SEC). Founder and CEO Mike Novogratz, the longtime crypto investor, isn’t thrilled with how the agency has handled the situation up until now, however.

In a discussion with New York Magazine’s Jen Wieczner during today’s Ethereal Summit, Novogratz suggested that the Grayscale Bitcoin Trust (GBTC)—which lets investors purchase shares in a fund that holds large amounts of the cryptocurrency—has been a bad deal for consumers in the absence of a true Bitcoin ETF.

“The job of regulators is to take care of the consumer, and I don’t think they did a great job of it in the [Trump] administration,” Novogratz said. “Just look at the Grayscale Trust, which was a great piece of business if you were Grayscale. But if you’re a consumer, you were buying Bitcoin at a 20-30% premium being arbitraged by hedge funds into a closed-end fund—where an ETF would have been a much more elegant solution. When I look at the SEC, I give them a low grade on that.”


A Bitcoin ETF is a publicly-traded investment vehicle that tracks the price of the cryptocurrency, allowing investors to gain exposure to Bitcoin without actually buying and taking custody of it.

At least eight firms, Galaxy Digital included, have filed to operate a Bitcoin ETF. Tyler and Cameron Winklevoss, co-founders of cryptocurrency exchange Gemini, were the first to file an application back in 2013 for a Winklevoss Bitcoin Trust—but the application was not approved. Canada has multiple active Bitcoin ETFs, as does Brazil, but the SEC has yet to approve a single US fund.

The Grayscale Bitcoin Trust was seen as a savvy investment by some as the price of Bitcoin surged over the last year. However, GBTC has recently traded at a discount as Bitcoin’s price gains have leveled out, drawing the ire of some prominent investors, plus buyers are subject to Grayscale’s management fee. Grayscale recently announced that it is “100% committed” to converting the fund into a Bitcoin ETF, but for now, Novogratz suggests that it is an inelegant alternative to the real deal.

“[The SEC] allowed one product that I think was not as good for the consumer,” Novogratz said of GBTC. “For a while, consumers did great on it and [founder and CEO] Barry Silbert gets a lot of credit because he put out a product that gave people their first access to Bitcoin, right? We all owe him a round of applause and thanks, because he brought people into that tent. [...] But if I was the SEC, I’d have said, ‘If you’re going to bring people into the tent, bring people into a tent that’s more consumer-safe.’”

Novogratz is more optimistic about the future of SEC regulation under newly-seated chairman Gary Gensler in the Biden administration. Gensler is seen as, if not crypto-friendly, at least a crypto-knowledgeable chairman, and Novogratz believes that his SEC will provide needed regulation to bring more institutional investors into the crypto industry. Certainly, Novogratz is eager to see the SEC change its views on Bitcoin ETFs after years without any approvals.


“Gary Gensler is going to be great for our ecosystem,” said Novogratz. “He is a very smart and practical guy that understands this space. We will get regulation, but I think we will get smart regulation.”

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