By
Steve Muchoki
April 29th, 2024
Grayscale CEO Sonnenshein ask the SEC to approve options for GBTC, adding that the Commission has already approved same for futures ETFs.
Giant crypto asset manager Grayscale Investments wants the United States Securities and Exchange Commission (SEC) to approve options on its spot Bitcoin exchange-traded fund (ETF). The company sent a letter written by CEO Michael Sonnenshein, urging the Commission for approval.
Grayscale Asked for Options on GBTC
“It is vital to the interests of GBTC and all spot Bitcoin investors to access exchange-listed options on GBTC and other spot Bitcoin ETPs,” wrote Sonnenshein.
The CEO pointed out to the SEC that a rejection would “unfairly discriminate” against the GBTC. Sonnenshein also highlighted the SEC’s previous approval of options for Bitcoin futures ETFs.
Options allow holders to purchase or sell an asset, including an exchange-traded product, at an agreed price, and on a set date. Grayscale is looking to expand the opportunities GBTC holders have, expanding their capacity to benefit from the Bitcoin sector. Generally, an approval of options traded on the GBTC ETF would attract more customers.
Upon approval of spot Bitcoin ETFs last month, Grayscale converted its GBTC Bitcoin Trust into an ETF. So far, Grayscale has set the highest fee of all ETFs active in the market, at 1.5%. Analysts believe this is why Grayscale’s ETF has been losing heavy amounts in net outflows every day. According to data from BitMEX Research, Grayscale has recorded net outflows every day since January 11, when the ETFs began trading. On Thursday alone, GBTC lost $216.4 million in net outflows. So far, the largest recorded was January 22, when the loss came to $640.5 million.
In an X post, Bloomberg analyst James Seyffart suggested that much of the outflows from Grayscale’s ETF are “likely finding a home in competing ETFs.”
Grayscale Believes Most ETFs Would Crash
In an interview with Bloomberg Television last month, Sonnenshein defended the 1.5% management fee for GBTC. According to him, there are several points Grayscale has over other issuers, including track record. The CEO said:
“As an investor, when you are choosing amongst these products, fees are a consideration, the asset manager, the issuer behind it are a consideration. But so should be size, liquidity, and that track record.”
Sonnenshein also told CNBC that issuers offering cheaper fees do not have the track record Grayscale does, and are just crashing fees to attract investors. According to the CEO, this move questions their long-term commitment to ETFs.
The CEO also gave a gloomy outlook on the ETFs. According to him, most of the currently active ETFs may lose steam and leave the market. Sonnenshein only believes two or three will remain.
Nearly a month after Sonnenshein’s comment, HANetf co-CEO and founder Hector McNeil expressed similar views. According to McNeil, “most of the current ETFs launched will never even break even,” Although he believes four or five will break even, he stated that the rest will shut down. The HANetf exec described the situation as a “race to the bottom” because too many people are fighting over a small pile.