Grayscale Bitcoin Trust aims for ETF shift to narrow discount

Grayscale, a significant player in digital asset management, has expressed enthusiasm about the potential transformation of its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF. This move could eliminate the current 8.09% discount of approximately $1.89 billion, aligning GBTC’s price more closely with the actual value of Bitcoin, offering significant benefits for investors.

The company’s chief legal officer, Craig Salm and chief financial officer, Edward McGee, revealed the details. Pending approval from the United States Securities Exchange Commission, GBTC is set to transition from its current platform, OTCQX, to the esteemed NYSE Arca exchange. This move seeks to better synchronize GBTC’s shares with the real Bitcoin price and introduce a streamlined mechanism for investors to create or redeem shares effortlessly.

ETF analyst Eric Balchunas from Bloomberg observed the notable dependence on Regulation M (Reg M) relief. He references past conversations suggesting that the SEC might use Reg M to possibly impede or postpone specific procedures, although he refrains from affirming this. Balchunas notes the intriguing timing of Regulation M being mentioned immediately after Grayscale’s meeting with the SEC, hinting at its potential significance or impact in their deliberations.

Related: SEC solicits comments on Fidelity’s spot Ether ETF application

With Bitcoin (BTC) currently priced at $39,481 and a surge in trading volume indicating heightened trader interest, the prospect of a spot Bitcoin ETF ensures investors a more precise representation of Bitcoin’s value through GBTC and establishes a safer avenue for institutional investors to engage with Bitcoin. This development has already led to a 3% increase in Bitcoin’s value in the last 24 hours, accompanied by a remarkable surge in trading volume, signaling widespread interest.

In a Nov. 28 X (formerly Twitter) post, Bloomberg ETF analyst James Seyffart said the SEC delayed its decision on the applications 34 days earlier than the Jan. 1, 2024, decision deadline. Seyffart and his colleague Eric Balchunas had placed 90% odds on spot Bitcoin ETF approvals by Jan. 10, 2024, and the twin delays “all but confirms for me that this was likely a move to line every applicant up for potential approval by the Jan 10, 2024 deadline,” Seyffart said.