Shares of Grayscale Bitcoin Trust (GBTC) hit a record low against its net asset value (NAV), trading at a 30.79% discount, data from YCharts shows.
GBTC is a private-placement trust that trades like a stock and allows investors to gain exposure to Bitcoin without actually buying the property. The firm takes care of custody in exchange for an annual management fee of 2%, while buyers acquire shares in the fund.
The steep discount to NAV may seem like a bargain, as it allows investors to buy “shares” in bitcoin below the actual market price, however, it comes with a catch, as GBTC has a six-month lockup. period occurs.
This means that the existing holders of the fund are making losses as the only way out for them is to sell the shares.
According to Grayscale’s website, GBTC currently has $18.3 billion in assets under management.
Convert GBTC to Bitcoin ETF
The Connecticut-based firm believes the only way to get rid of the deep discount is to convert GBTC into a bitcoin etf– an exchange-traded fund backed by physical bitcoin – and working hard to achieve that goal.
Should the US Securities and Exchange Commission (SEC) approve Grayscale’s pending application, it would effectively reset the GBTC exemption to zero.
The problem is that the SEC has yet to approve a single spot bitcoin ETF, citing the dual risks of price manipulation and bitcoin’s volatility. At the same time, the agency has already approved several bitcoin futures ETFs, which are tied to futures contracts.
In a letter sent to the SEC last month, Grayscale argued that the way the regulator approved a fourth bitcoin futures ETF, Tucreum, opened the door for a spot bitcoin ETF.
The rationale is that the first three bitcoin futures ETFs—ProShares (BITO), Valkyrie (BTF) and VanEck (XBTF)—were approved by the SEC under the Investment Companies Act of 1940. However, the Teucrium ETF was approved under Securities. Act of 1933, which provided greater investor protection and could be used as the basis for launching spot bitcoin ETFs.
according to recent CNBC Reportedly, Grayscale met privately with the SEC last week to persuade the regulator to convert its flagship fund to ETFs.
“The SEC is discriminating against issuers by approving bitcoin futures ETFs and denying bitcoin spot ETFs,” Grayscale said in a presentation to the SEC.
The regulator’s deadline for approving or rejecting Grayscale’s application is July 6.
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