Biggest Bitcoin fund in the world could become ETF by July as GBTC nears $40B AUM

Grayscale could launch its Bitcoin (BTC) exchange-traded fund (ETF) as soon as July 2022, one of its executives has said.

Speaking at a virtual event organized by MarketWatch on Oct. 27, Grayscale global head of ETFs David LaValle gave a nine-month timeline for approval by United States regulators.

Grayscale: Now’s the time to file for an ETF

Grayscale, which runs the largest-volume Bitcoin investment product globally, the Grayscale Bitcoin Trust (GBTC), reiterated this month that it is “committed” to transforming it into an ETF.

According to LaValle, the timing for submitting the application to do so this week was ideal.

“We thought it was the perfect time to submit our filing,” he said.

“Now that the Bitcoin futures products were somewhat off the plate of the SEC, they would be open to look at the filings of spot-based products.”

ETF applications require a lengthy 240-day analysis period with the U.S. Securities and Exchange Commission, opening up the potential for a go-ahead by July.

October saw four ETFs get the green light, these all based on Bitcoin futures rather than spot, something which Grayscale and others are keen to change.

GBTC had $38.8 billion in assets under management (AUM) as of Thursday, with the total across all Grayscale funds now at $53.1 billion.

Hayes: ETF market needs “fresh capital”

As Cointelegraph reported, hopes are high that spot ETFs will be allowed to operate from November amid fresh criticism of futures-based products.

Related: GBTC delivered better returns than Bitcoin ETFs last week

JUST SAW ANALYSIS by a fund manager trader of the 1st futures roll date for the #bitcoin ETFs (they roll to new front-month contract). As many predicted, it’s not pretty–ETF investors face big tracking error. Add to that two flash crashes in #BTC price since ETF inception. Ugh

— Caitlin Long (@CaitlinLong_) October 29, 2021

Arthur Hayes, former head of derivatives trading giant BitMEX, delivered a more scathing take on the entire ecosystem this week.

“There already exists a pseudo-ETF with over $40 billion in AUM, the Grayscale Bitcoin Trust (GBTC). It is not technically an ETF, but it hoovered up assets nonetheless. Therefore, what is required is not a movement of AUM from one tracker product to another, but fresh capital into the system,” he wrote in a dedicated blog post.

“When GBTC is added to the mix of US-listed tracker products, will there actually be net new demand from retail traders and institutions who aren’t already invested in the space? I fear that the narrative on institutional and retail investors plowing AUM into the complex might be misplaced, as those who want to be involved largely already are.”

Markets have had years to price in a potential ETF launch, this having seen multiple rejections by the SEC, each moving the Bitcoin price less and less with time.

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