A Bitcoin BTC/USD ETF is looking very likely, with the world's leading crypto asset manager, Grayscale, as a possible front-runner to be approved by the SEC. In the meantime, Grayscale is lengthening its lead by applying to convert the Grayscale Ethereum Trust (ETHE) to a spot Ethereum exchange-traded fund (ETF).
Grayscale will be speaking at Benzinga's Future of Digital Assets event on Nov. 14 in NYC.
The Grayscale Ethereum Trust represents 2.5% of all ETH in circulation and is the largest ETH investment vehicle in the world. Grayscale stated that the ETHE trust has always been on the path to becoming an ETF. Currently, the Ethereum underlying the trust is discounted at 30%, but the ETH would be worth $5.14 billion at full market value.
Shares of ETHE spiked 6.15% in value following the announcement of the spot Ethereum ETF.
Tim Draper, a prominent investor and entrepreneur known for successful investments in companies such as Tesla, Skype, and Coinbase, gave Benzinga exclusive comments on the Grayscale spot BTC ETF application. To Draper, approval seems to be a matter of time: "I am surprised it has taken so long. I'm not sure why the SEC approved futures and not spot trading. It seems capricious," Draper said.
He expects the availability of a spot Bitcoin ETF to encourage more adoption and investments in BTC.
"It will allow more people to participate in this new global, open, transparent, frictionless economy provided by Bitcoin and its blockchain. It will bring more light on the unbanked who can use Bitcoin to participate in the global economy," Draper said.
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One month ago, Circuit Judge Neomi Rao wrote a DC Circuit Court of Appeals opinion that favored Grayscale's application to convert the Grayscale Bitcoin Trust (GBTC) into a more accessible Exchange Traded Fund (ETF). Rao's opinion said, in part, "The Commission failed to adequately explain why it approved the listing of two Bitcoin futures ETPs but not Grayscale's proposed Bitcoin ETP. In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful. We therefore grant Grayscale's petition for review and vacate the Commission's order."
Other applicants for a spot BTC ETF include ARK Investment, BlackRock, Bitwise, Fidelity/Wise Origin, GlobalX, Invesco Galaxy Bitcoin ETF, VanEck, and WisdomTree.
Investor, author, and Forbes contributor Clem Chambers said: "It seems unlikely that there will be much of a gap between applicants if a BTC ETF is cleared… To me it's anyone's guess when it will be approved, but if the SEC had its way there will be no ETF unless they think it will be a negative for Bitcoin and crypto."
The legal victory in DC compels the US Securities and Exchange Commission (SEC) to revisit the Grayscale application for a spot BTC ETF after rejecting it.
Bloomberg ETF analysts Eric Balchunas and James Seyffart welcomed the news by raising the odds of the SEC approving a spot Bitcoin ETF to 75% by the end of 2023 and 95% by the end of 2024.
Find out more about Bitcoin and its history. Join Benzinga's Fintech Deal Day & Awards on Nov. 13 and Future of Digital Assets on Nov. 14 in New York City to stay updated on trends like AI, regulations, SEC actions, and institutional adoption in the crypto space. Secure early bird discounted tickets now! What's more, use BZCRYPTO code to get 20% OFF.
Photo: Web Summit on Flickr
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