According to Sonnenshein, the SEC would be making a mistake if it approves Bitcoin-based ETF in the US before granting approval for one tied to the crypto itself.
Michael Sonnenshein, the CEO of digital currency asset management giant Grayscale Investments has reacted to a recent comment by the Securities and Exchange Commission (SEC) on Bitcoin ETF. The SEC chair Gary Gensler hinted that the Commission may approve the first Bitcoin ETF in the US. Gensler’s statement caused a stir, triggering a reaction from the CEO of Grayscale Investments.
Grayscale CEO Opposes SEC on Bitcoin ETF Approval
According to Sonnenshein, the SEC would be making a mistake if it approves Bitcoin-based ETF in the US before granting approval for one tied to the crypto itself. Speaking to CNBC’s Squawk Box, the CEO explained:
“It would be shortsighted of the SEC to allow a futures-based product into the market before a spot product. They really should be allowing both products into the market at the same time and let investors choose what they want.”
In a follow-up phone interview, the CEO further warned about the possible downsides that may come with the ETF approval. Notably, an ETF based on futures will cause investors to pay more in fees. Investors will have to pay for the rolling over futures contracts when they expire.
For some time now, Grayscale has been looking to convert its Bitcoin Trust into an ETF. An ETF will allow investors to put their money in an investment fund that would keep track of Bitcoin’s price. Back in August, the SEC chair hinted that the Commission would review applications for ETF launch from investment firms. Specifically, the regulator was seeking to consider applications to launch ETFs tied to Bitcoin futures on the Chicago Mercantile Exchange (CME). Without Grayscale Bitcoin Trust’s successful transition into an ETF, investors may need to divert their funds into a future-based ETF.
Investors at a Disadvantage with Possible US Bitcoin ETF
During the follow-up phone interview, Sonnenshien talked about the disadvantage of the ETF to investors. He said:
“If a futures-based ETF comes to market without the ability for GBTC to convert to an ETF, it has the potential to harm investors who hold tens of billions of dollars’ worth of GBTC today outright, as well as the investors who have exposure to GBTC inside mutual funds, retirement accounts and other places.”
However, the Grayscale CEO believes that the SEC’s possible approval for the ETF will be good for Bitcoin. According to Sonnenshein, the Commission is pleased with the underlying asset class to suggest derivatives tied to the crypto asset.
With a Bitcoin Trust of $32.4 billion in assets under management, a recent report revealed that Grayscale huge crypto trusts are now larger than the economy of Bahrain. Grayscale boasts of its enormous Bitcoin trust that currently holds over 3% of the available supply of Bitcoin. In total, Grayscale has a massive $47 billion in digital assets under management.
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