What People Are Saying About a Spot Bitcoin ETF

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Since launching our campaign earlier this year, there’s been overwhelming support from academics, market participants, other communities, and – most importantly – our investors, advocating to convert GBTC to an ETF. We’ve seen letters from:

 

  • Blockchain industry peers like Coinbase and Bitgo
  • Traditional financial institutions like Fortress, Horizon Kinetics and Silvergate
  • Market participants like DRW, Flow Traders, GTS, Jane Street, Susquehanna, and Virtu
  • Academics like Robert Whaley, Developer of CBOE VIX, of Vanderbilt; Hashem Dezhbakhsh, Narasimhan Jegadeesh, Juan Rubio-Ramirez of Emory; Campbell R. Harvey of Duke; James J. Angel, Ph.D., CFP, CFA of Georgetown; Carol R. Goforth of University of Arkansas; David Noble of UConn, and Donna Redel of Fordham and Wharton
  • Trade associations like Security Traders Association, Blockchain Association, and Association of Digital Asset Markets

 

All of these groups have made excellent use of the SEC’s well-established open comment process, submitting thousands of letters (all of which can be found here). 

 

Below, we analyze the comment letter submissions as of June 9 and highlight several themes that have emerged.

 

1. Commenters want a spot Bitcoin ETF

 

Over 11,000 comment letters have been submitted, many written by shareholders.1 We are encouraged not just by the number of people who want to see GBTC converted to a spot Bitcoin ETF, but also the strength of their convictions. Of note, 99.96% of comment letters were submitted in support of the conversion.2

 

2. ETFs that hold Bitcoin futures are not enough

 

To date, the SEC has only approved futures-based ETFs for Bitcoin while rejecting “physically-backed” or spot-based ETFs – many comment letters highlight this inconsistency, as noted below. We believe that investors should have a choice between futures- and spot-based products, and should not be forced into a futures-based product simply because it is the only one that exists. Commenters have agreed with us: nearly one-third (32%) of the letters submitted asked the question “if there are Bitcoin futures ETFs, why not a spot Bitcoin ETF?”3

Some commenters raised legal and administrative concerns about distinguishing between these two types of products. Letters expressed the views that the SEC should not be a merit regulator, discriminate against issuers, or pick winners and losers, and that doing so arbitrarily and capriciously could represent an Administrative Procedure Act (APA) violation. 

 

3. A wide cross-section of investors shared their views

 

As part of the open comment process, some commenters shared details about themselves. Of those who shared their occupations, the most common included:

Source: Flag Analysis, Grayscale Investments

Many submissions also revealed the state from which authors were writing. The most mentioned U.S. state was California (14%), of commenters that included their state, followed by Florida (9%), Texas (9%), and New York (6%).4

Source: Flag Analysis, Grayscale Investments

Only letters/comments where the writer chose to voluntarily self-identify their state were included.

4. The protections inherent to an ETF are appealing 

 

GBTC has been an SEC reporting company since January 2020. Many commenters shared their beliefs that conversion to an ETF would protect investors and the public interest, by allowing the product to better track NAV, and provide American investors the freedom to invest in Bitcoin in a safe and secure manner.

 

5. GBTC converting to an ETF will allow America to stay competitive

 

Hundreds of letters mentioned countries that have approved spot Bitcoin ETFs, and expressed concern that the U.S. is in danger of falling behind. The most mentioned jurisdictions were Canada and Australia followed by others in Europe and South America.5 Commenters pointed out that the SEC is uniquely positioned to support the White House Executive Order on Cryptocurrency to ensure America leads in digital asset innovation by further bringing Bitcoin into the regulatory perimeter.

 

We are hopeful that our arguments – and the more than 11,000 comments letters help reinforce our belief that a spot Bitcoin ETF is in the best interest of investors that the SEC is meant to protect. As we approach the July 6th deadline, we are operationally ready to support GBTC as an ETF and are preparing for all scenarios. We will continue to argue in support of what our investors want, and what we believe they deserve: conversion of GBTC to a spot Bitcoin ETF.

 

If you haven’t already, we encourage you to submit your comment to the SEC today.

  1. ‘Shareholders’ defined by individuals who submitted form comment letters specific to shareholders.
  2. Data is based on a report by Flag Analysis using data from the SEC website to determine the origins and common terminology used in letters submitted.
  3. Data is based on a report by Flag Analysis using data from the SEC website to determine the origins and common terminology used in letters submitted. 
  4. Data is based on a report by Flag Analysis using data from the SEC website to determine the origins and common terminology used in letters submitted.
  5. Data is based on a report by Flag Analysis using data from the SEC website to determine the origins and common terminology used in letters submitted.
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