Grayscale Might Convert Bitcoin Trust Into BTC-Settled ETF

Institutional investment behemoth Grayscale is allegedly considering changing its Bitcoin Trust into a physically settled exchange-traded fund (ETF). Grayscale seems to be aiming to restructure its Bitcoin Trust into a physically-backed fund after the SEC approved a Bitcoin futures ETF.

On October 17, the CEO of Grayscale’s parent company Digital Currency Group, Barry Silbert, said that Grayscale is making some plans to change its Bitcoin Trust into a spot-settled Bitcoin fund.

After he took to Twitter to criticize the cash-settled Bitcoin futures ETF recently approved by the United States Securities and Exchange Commission (SEC); Bitcoin commentator Preston Pysh came in to ask Silbert when Grayscale’s Bitcoin Trust might be changed into a BTC-settled ETF. “Stay tuned,” Silbert responded.

stay tuned

— Barry Silbert (@BarrySilbert) October 17, 2021

Nevertheless, Grayscale Bitcoin Trust investors seem to be unsettled by Silbert’s remarks, with Twitter user “svrgnindividual” questioning what such a restructure would mean for the investors that hold shares in Grayscale’s Bitcoin Trust.

They tweeted:

“What happens to us Grayscale investors once the spot ETF is approved? Is our investment converted into ETF shares?”

Grayscale Has Bitcoin ETF Ambitions

Rumors of Grayscale’s alleged ambitions for a BTC ETF started circulating in the past week after a CNBC report citing anonymous insiders alleged that Grayscale was waiting for the Securities and Exchange Commission to eventually approve a Bitcoin ETF.

The SEC announced on October 15 that it has accepted the registration of securities from ProShares Trust’s futures-based Bitcoin (BTC) exchange-traded fund. ProShares offers investors some exposure to contracts that speculate mainly on the price of Bitcoin that are settled in cash.

This ETF’s approval being cited as the main catalyst for BTC’s recent bullish market action. However, most of the analysts have criticized the fund for its cash-settled structure. They said that it should urge the Securities and Exchange Commission to approve a Bitcoin ETF that is backed and settled in Bitcoin.

Based on Grayscale’s latest holdings update on October 15, the company boasts $52.6 billion in assets under management (AUM); 73% of which is held in the Bitcoin Trust. This data indicates that Grayscale’s Bitcoin stash consists of almost 620,000 BTC or 3.3% of Bitcoin’s total supply.