Grayscale Investments said yesterday it intends to convert its Grayscale Bitcoin Trust, the largest Bitcoin investment vehicle in the world, into an exchange-traded fund when regulators allow it to.
"First and foremost we wish to make clear: we are 100% committed to converting GBTC into an ETF," the firm said in a blog post yesterday.
The Grayscale Bitcoin Trust has $38.8 billion in funds under management. It would rank among the 30 largest U.S. ETFs, and the second-largest commodity ETF, according to Bloomberg.
According to Grayscale, it always planned to convert its Bitcoin trust, and its trusts for other cryptocurrencies, to ETFs once regulators gave the green light. It said it first applied for a Bitcoin ETF In 2016 and then spent much of the following year in dialog with the U.S. Securities Exchange Commission. It then withdrew its application because it believed an ETF would not be approved.
Grayscale said it was "confident" in its current engagement with the SEC on an ETF conversion. Upon conversion, current GBTC unitholders would not need to take any action, and fees would be reduced accordingly, it said.
Several firms, including Fidelity, have filed applications for Bitcoin ETFs with the SEC in recent months.
The Grayscale announcement could slow down or halt a deepening discount of GBTC's price to its underlying assets, analysts say. The trust could attract new buyers who expect the price to catch up to the value of its underlying assets once an ETF conversion takes place. The discount grew to a record 14% below the fund's net asset value last week, Bloomberg reported.
"Stating their intention to convert puts a floor on the depth in discount because at some level -- market participants are going to be willing to buy a product that is bound to be trading at NAV when the SEC approves a Bitcoin ETF," Bloomberg Intelligence analyst James Seyffart told Bloomberg News.