Grayscale Bitcoin Trust (GBTC) has been on an uncertain journey over the past year as cryptocurrency headwinds have fluctuated. This was the result of the uncertainty caused by the bankruptcy of Genesis Trading, a company under the same umbrella as Digital Currency Group (DCG), of which GBTC is a part.
Nevertheless, confidence has improved as the market moves away from this event and the discount begins to narrow.
Grayscale Bitcoin Trust Discount Up to 28%
The crypto winter of 2022 saw the Grayscale Bitcoin Trust discount to NAV widen in a matter of months. At one point, the discount had shifted to nearly 50%, meaning that at its highest premium, investors in the trust held BTC at a price 50% lower than the digital asset’s spot market price.
However, with BTC rallying through 2023 thus far, recovering almost 100% from its 2022 lows, GBTC has also been on a recovery curve. Recently, the discount has nearly halved in the space of six months.
According to YCharts data, the Grayscale Bitcoin Trust discount is 28.24% as of July 10. The performance of the GBTC over the years has led Grayscale to propose converting the trust into a spot Bitcoin ETF. Although the company presented arguments to support this measure, the United States Securities and Exchange Commission (SEC) has remained vehemently against this idea.
So far, Grayscale has filed twice to convert the GBTC into a Spot Bitcoin ETF and the regulator has rejected the filing twice. The second time, Grayscale sued the regulator after being rejected again in June 2022, and the company hasn’t looked back since.
Another Bold Move Against the SEC
With the June 2022 lawsuit still ongoing, Grayscale has taken another bold step and filed a letter with the DC Circuit calling on the SEC. On this occasion, the digital currency asset manager is challenging the regulator’s decision to approve leveraged Bitcoin ETFs but not spot Bitcoin ETFs.
On July 10, Grayscale tweeted that “our attorneys filed a letter with the DC Circuit highlighting the disparity between the SEC’s approval of a leveraged #bitcoin futures ETF while continuing to deny approval of spot bitcoin ETFs like $GBTC.”
Grayscale notes in its July 10 filing that although these leveraged ETFs are riskier compared to spot ETFs, the SEC has given them approval and rejected the latter.
In the letter, lead counsel Donald B. Verrilli Jr. highlighted that the Volatility Shares 2x Bitcoin Strategy ETF (BITX) that was approved by the SEC in June “exposes investors to an even riskier investment product than traditional exchange-traded bitcoin futures.” products (ETP)”.
The attorney referred to the SEC’s rejections of Spot BTC ETFs as “discriminatory.” However, Verrilli suggests that the regulator could fix this by allowing “proposed Bitcoin spot ETPs like Grayscale’s to start trading.”
Grayscale further tweeted that “To be clear, we’re not saying products like this shouldn’t exist. Instead, we are calling to attention that there’s no good reason to continue to deny approval of spot products while leveraged futures products are allowed to trade.”
Grayscale’s series of tweets conclude by asserting that their actions are motivated by the fact that “investors are eager for $BTC exposure with the protections of the ETF wrapper.”
By Marina Meza
