Grayscale Investments CEO Michael Sonnenshein recently evaluated the company's ongoing fight with the US Securities and Exchange Commission (SEC) over the creation of a spot Bitcoin exchange-traded fund (ETF).
In an interview with Bloomberg, Sonnenshein addressed concerns about BlackRock potentially launching the first Bitcoin ETF and how Grayscale plans to tackle the competition.
Sonnenshein stated that Grayscale is ready for a market with multiple spot Bitcoin ETFs, pointing to the existence of several Bitcoin futures-based ETFs currently. Emphasizing that they are focusing on converting the Grayscale Bitcoin Trust (GBTC) into an ETF, Sonnenshein stated that they hope to receive a positive opinion from the DC Circuit Court in the summer.
When asked about the timeline for resolving the SEC case and its implications for the transformation, Sonnenshein said the court's decision could come at any time and they expect it to come out by the fall. While acknowledging the uncertainties regarding timing, he expressed optimism and stated that they intend to work proactively with the SEC to ensure a smooth transition.
The conversation then shifted to oversight sharing agreements, which played a crucial role in recent ETF filings. Sonnenshein explained that Grayscale is actively discussing such deals with Coinbase and the New York Stock Exchange.
Sonnenshein noted that the SEC is focusing on oversight sharing as a prerequisite for overseeing the underlying Bitcoin market, but it remains to be seen if these regulations meet the SEC's requirements.
When asked about the likelihood of a Bitcoin ETF getting approval by the end of the year, Sonnenshein reiterated his belief that it was a question of “when”, not “what if”. Highlighting the significant progress GBTC has made in providing investors with access to Bitcoin, Sonnenshein highlighted the growing interest of financial services providers in modeling crypto products based on Grayscale's activities.
Sonnenshein touched on the potential impact of the launch of a second or third Bitcoin ETF, noting that GBTC is currently the largest Bitcoin fund in the world, holding about $20 billion and more than 3% of the current Bitcoin supply.
Sonnenshein said he believes the appetite for Bitcoin ETFs will increase among investors, both in the financial advisor market and in the retail market, due to pent-up demand.
Regarding the recent resolution of the lawsuit with Fir Tree Capital Management, Sonnenshein noted that this eases Grayscale's focus on continuing with the GBTC transformation. He specifically stressed that the case is separate from Grayscale's investment products and their priority remains the successful conversion of GBTC to an ETF.
The interview also touched on another lawsuit involving Gemini and Grayscale's parent company, Digital Currency Group (DCG). Sonnenshein explained that Three Arrows, a major investor in GBTC, is a client of Grayscale, but stated that the ongoing lawsuits and charges are separate from Grayscale's activities and its focus is on GBTC transformation.
Regarding the potential ETF's structure and fees, Sonnenshein said that GBTC already shares many fundamentals with an ETF, but lacks the ability to create and exercise shares.
*Not investment advice.
