Grayscale Investments looking to convert its flagship Grayscale Bitcoin Trust (GBTC) to a spot bitcoin ETF could have huge implications for other spot bitcoin funds. After all, to date, the Securities and Exchange Commission has only permitted bitcoin futures ETFs and rejected spot bitcoin ETFs.
Grayscale is the biggest global digital currency asset manager, and GBTC is the largest bitcoin trust worldwide. NYSE Arca filed for the conversion on Grayscale’s behalf in October of 2021. If the SEC approves the application, GBTC would be converted into a bitcoin spot ETF linked directly to the largest cryptocurrency.
If GBTC successfully converts to an ETF, that could open the floodgates for other spot bitcoin ETFs. It could also broaden exposure to The Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC). Launched in October, SATO and BLKC offer thematic equity exposure to global public companies and select investment vehicles that are actively engaged in the cryptocurrency and blockchain sectors.
SATO aims to track the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts & ETPs Index and provide exposure to companies participating in both the cryptocurrency and blockchain space, including businesses such as cryptocurrency miners, cryptocurrency infrastructure technologies, and cryptocurrency buyers.
BLKC, meanwhile, aims to track the Alerian Galaxy Global Blockchain Equity, Trusts & ETPs Index and offer access to the same companies as SATO in addition to a segment of companies that are engaged in the research and development of blockchain technology not tied to cryptocurrency.
Both funds have 15% of their holdings in shares of the Grayscale Bitcoin Trust, which has the largest allocation to a physically backed bitcoin vehicle in the U.S.
SATO and BLKC are the first from Invesco’s partnership with Galaxy Digital Holdings.
In December, Grayscale prepared to sue the SEC with a pre-action letter arguing that the SEC’s decision to allow a futures ETF but not a spot bitcoin one is “arbitrary and capricious.”
Recently, Grayscale set up a dedicated campaign page encouraging investors to submit comments on its application with the SEC to convert GBTC to a spot bitcoin ETF.
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