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Grayscale Launches European ETF While Urging SEC to Approve GBTC Conversion Into Spot Bitcoin ETF

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Grayscale Launches European ETF While Urging US SEC to Approve GBTC Conversion to Bitcoin ETF

Grayscale Investments has announced the launch of an exchange-traded fund (ETF) in Europe. The company’s Future of Finance UCITS ETF will list on the London Stock Exchange (LSE), Borsa Italiana, and Deutsche Börse Xetra.

Grayscale Launches ETF in Europe

Grayscale Investments, the world’s largest digital asset manager, announced Monday the launch of its first European exchange-traded fund (ETF) called Grayscale Future of Finance UCITS ETF (ticker: GFOF). It will list on the London Stock Exchange (LSE), Borsa Italiana, and Deutsche Börse Xetra, the company said.

The announcement details:

GFOF UCITS ETF tracks the investment performance of the Bloomberg Grayscale Future of Finance Index and seeks to offer investors exposure to companies at the intersection of finance, technology, and digital assets.

UCITS ETFs are products domiciled in European markets that are subject to the Undertakings for the Collective Investment in Transferable Securities regulation.

The GFOF UCITS ETF is Grayscale’s second ETF. The first, announced in February, is listed in the U.S. in partnership with Bloomberg. It also tracks the investment performance of the Bloomberg Grayscale Future of Finance Index.

“We announced our first ETF earlier this year in partnership with Bloomberg as part of the expansion of our business,” said Grayscale CEO Michael Sonnenshein. “We’re thrilled to be expanding our offering in Europe through the UCITS wrapper.”

Meanwhile, Grayscale is trying to convince the U.S. Securities and Exchange Commission (SEC) to approve the conversion of its flagship product, the Grayscale Bitcoin Trust (GBTC), into a spot bitcoin ETF. GBTC currently has $19.2 billion in assets under management.

The company recently had a private meeting with the SEC to discuss its application, according to CNBC. The asset manager told the regulator that turning its Bitcoin Trust product into a NYSE-traded ETF would broaden access to bitcoin and enhance protections while unlocking up to $8 billion in value for investors.

So far, the SEC has not approved any spot bitcoin ETF. The deadline for the securities watchdog to either approve or reject Grayscale’s application is July 6. “The SEC is discriminating against issuers by approving bitcoin futures ETFs and denying bitcoin spot ETFs,” Grayscale previously said.

What do you think about Grayscale launching an ETF in Europe while trying to convince the SEC to approve its spot bitcoin ETF application? Let us know in the comments section below.

Major Increase In Bitcoin Trading Volume

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A significant amount of bitcoin changed hands on the United States’ most dominant spot exchange, Coinbase, as investors look to buy the dip.

The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Thursday, May 12, 2022, was one of the most exciting and active days in the bitcoin/crypto market in months, with no shortage of volatility and fear from market participants. On the bitcoin side of things, the price plummeted to a low of $25,300 on large volume, before quickly rebounding and closing the daily candle at $28,900. With the fall came a strong response from opportunistic investors looking to buy the dip, as shown by the Canadian Purpose Bitcoin ETF, which saw its largest day of inflows ever, adding 6,902 BTC worth nearly $207 million. 

Canadian Purpose bitcoin spot ETF holdings

Similarly, Thursday saw the largest amount of bitcoin volume traded in a day on Coinbase since May 19, 2021, signaling that a significant amount of bitcoin changed hands on the United States’ most dominant spot exchange. Looking at Coinbase 3-day volume bars for bitcoin, large spikes are typically signals of inflection points near local bottoms or tops. While there is obviously a whole confluence of variables that need to be taken into account when looking for absolute market bottoms, a large volume spike in spot markets and subsequent bounce above $30,000 for bitcoin is a promising sign. 

Bitcoin price and volume on Coinbase

This aligns with our macro view that the U.S. economy is in the midst of a large stagflationary slowdown, which damages asset prices and leads to diminishing liquidity in financial markets as the Federal Reserve tightens monetary policy. As consumers continue to get their wallets squeezed, the slowdown of economic activity will compound in a positive feedback loop of diminishing growth and economic activity.

Our core thesis is that this will inevitably lead to additional fiscal and monetary stimulus, as the global economy cannot handle a sustained economic slowdown due to the mechanics of the debt-based monetary system we find ourselves in today, with a record amount of debt that needs to be serviced and refinanced.

Subscribe to access the full Bitcoin Magazine Pro newsletter.

Grayscale Met With SEC On Approval Of Spot-Bitcoin ETF

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Grayscale met with the SEC behind closed doors to persuade regulators to approve the fund’s application to convert into a spot-bitcoin ETF.

  • Grayscale, the largest bitcoin fund in the world, met with the SEC in a closed meeting.
  • The meeting was meant to persuade regulators to approve Grayscale’s conversion from a fund to a spot-bitcoin ETF.
  • The deadline of approval for Grayscale’s ETF application is July 6, 2022.

Grayscale, the company behind the world’s largest bitcoin fund (OTCQX: GBTC), had a private meeting with the Securities and Exchange Commission to persuade the regulator to approve the conversion of its flagship fund into an exchange-traded fund (ETF), according to a report from CNBC.

Grayscale hopes to convert the fund to broaden access to bitcoin and enhance protections while freeing up to $8 billion for investors according to a presentation reportedly obtained by CNBC. The logic behind the expected jump in valuation is attributed to the fact that GBTC consistently trades at a 25% discount when compared to the underlying asset of bitcoin. Grayscale reportedly said this discount would disappear if it was converted into an ETF.

Since April of last year when the company made its initial announcement to convert the fund into an ETF, Grayscale has been locked in conflict with the SEC. However, the asset manager has also witnessed the SEC willfully approve futures-based ETFs from providers like ProShares based on bitcoin, while spot-ETFs focused on the asset of bitcoin remain overlooked.

When Grayscale CEO Michael Sonnenshein was asked by Bloomberg if the fund would consider legal action against the SEC if it continued to be denied, he responded ”I think all options are on the table come July,” earlier this March.

“The SEC is discriminating against issuers by approving bitcoin futures ETFs and denying bitcoin spot ETFs,” Grayscale reportedly stated.

A spot-bitcoin ETF would allow investors to interact with bitcoin in a more direct manner without actually purchasing the underlying asset. Funds invest in projects and companies related to a specific asset or field, while a spot-bitcoin ETF would actually acquire the hard asset, deriving its value directly from bitcoin.

Futures-focused ETFs are a derivative of bitcoin and trade in correlation to the price, but they include more complex mechanisms and less capacity for a simple buy and hold strategy for the sake of strengthening a balance sheet.

Greyscale’s deadline for acceptance of its application to become an ETF is July 6. 

Majority of Financial Advisors Want To Increase Bitcoin Exposure: Nasdaq Survey

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In a survey featuring 500 financial advisors, 72% want to invest more heavily in the ecosystem.

  • A survey of 500 financial advisors saw 72% desiring to invest more into the bitcoin and broader cryptocurrency sector if a bitcoin spot ETF was approved.
  • Those surveyed are already invested into bitcoin or other cryptocurrencies, or are highly considering allocation to the asset class.
  • Less than 9% of advisors are confident in their ability to expertly advise clients within the asset class, denoting an educational gap between traditional finance and an emerging monetary system.

In a Nasdaq survey of 500 financial advisors whom are already allocated or consider allocation towards bitcoin and other cryptocurrency-based products, 72% would invest more heavily into the space if a spot exchange-traded fund (ETF) was approved, according to a press release sent to Bitcoin Magazine detailing the results.

“Over the last decade, financial advisors have been focused on shifting assets into index funds,” said Jake Rapaport, head of digital asset index research for Nasdaq, per the release. “As they incorporate digital assets into their investment strategies, they are expressing strong interest in a similar vehicle that can offer broad asset class exposure for their clients.”

Financial advisors, both retail and institutional, are taking a broader interest in Bitcoin and other cryptocurrencies. While this is true, it is important to keep the correct perspective in mind as these conversations evolve.

According to a January survey from Bitwise, one of the largest cryptocurrency managers in the world, financial professionals allocating to bitcoin and other products had risen to 15%, up from 9% in the previous year. These numbers lend to a responsible expectation of adoption for financial professionals as they show we still have quite a long way to go. However, continuing to look at those already allocated to the space still provides immense value.

Nasdaq’s survey found that 86% of advisors who pre-allocated to bitcoin or other cryptocurrencies plan to increase allocation over the next 12 months, while none of them intend to subtract from their portfolios. Of the same sample class, 50% are already using bitcoin-based ETF futures and another 28% intend to within 12 months.

As this survey only represents a small portion of financial advisors, it is still undeniable that professionals entering the space quickly discern value for their investors and latch on for the long haul. Despite the favorable terms understood by financial advisors allocating to bitcoin and other cryptocurrencies, there still remains much doubt to the hope a spot ETF will be approved this year.

While 7% of those surveyed are unsure of spot ETF prospects being successful in 2022, 38% find it likely to succeed, 31% expect failure, and 24% of those surveyed held a neutral stance.

The lack of confidence for a spot ETF approval should serve as a signal to those unallocated to bitcoin as the demand for those already investing only grows by the day, likely looking to take first-mover advantages over those slower to adoption.

Of those surveyed, registered investment advisors (RIAs) represent 34% of the user base, whereas 19% are held by independent broker-dealers and another 17% by wirehouse advisors. Only 7% listed environmental, social, and governance (ESG) as an important criteria for investment strategies, 10% felt knowledgeable about bitcoin and other cryptocurrencies, and only 9% felt confident in their advisory capabilities. An overwhelming majority (98%) expressed a desire to further their education in the broader cryptocurrency space.

It’s important to reiterate that only 9% of those surveyed feel confident in their ability to advise towards bitcoin and other cryptocurrencies. As noted above, this is a smaller percentage of the total financial advisory ecosystem, yet, of those involved, less than one out of every 10 advisors feels like they know what they are doing.

“Crypto inflows through advisor channels show no signs of stopping, even as advisors grapple with compliance considerations and look for guidance from educational materials from other industry participants, including asset managers and index providers,” Rapaport said. “We expect ESG and crypto considerations to converge as investors continue to direct assets into both.”

As traditional finance tries to embed itself amongst an emerging system, financial advisors still have a lot to learn. The educational gap, however, does not seem to be slowing down attempts to cash-in on the gains of the bitcoin ecosystem.

“The vast majority of advisors we surveyed either plan to begin allocating to crypto or increase their existing allocation to crypto,” Rapaport said. “As demand continues to surge, advisors will be looking for an institutional solution to the crypto question that now dominates client conversations.”

Nasdaq Will List Valkyrie’s Bitcoin Mining ETF On Feb. 8

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The bitcoin mining exchange-traded fund will go live on Tuesday under the ticker symbol “WGMI.”

A new bitcoin-linked ETF is just around the corner as the Valkyrie Bitcoin Miners ETF received approval for listing on the Nasdaq exchange, according to a Monday filing with the Securities and Exchange Commission.

Valkyrie CEO Leah Wald said “an increased focus and desire to gain exposure to bitcoin miners from investors” prompted the company to apply on January 26 to the SEC to offer the exchange-traded fund, which will invest 80% or more of its net assets in firms deriving at least half of their profit from bitcoin mining and related activities. The remainder of the ETF’s assets will be invested in companies holding a “significant portion” of their net assets in bitcoin, per the January 26 filing.

The Valkyrie Bitcoin Miners ETF will start trading on the Nasdaq on Tuesday under the ticker symbol “WGMI,” the asset manager said in an emailed statement Monday.

Valkyrie was the second asset manager to offer a bitcoin futures ETF in U.S. markets in October after ProShares debuted its ProShares Bitcoin Strategy ETF (BITO) in the New York Stock Exchange. On its first day of trading, BITO finished among the top 15 ETF launches of all time after trading $250 million worth of shares in its first 15 minutes, and on its second day became the fastest ETF ever to hit $1 billion in assets.

Bitcoin saw increased appetite by institutional investors last year as larger corporations began dabbling in the digital currency. Tesla invested $1.5 billion in bitcoin at the beginning of 2021, now worth nearly $2 billion. MicroStrategy, the biggest corporate bitcoin holder, hasn’t stopped accumulating the digital currency and recently added thousands of fresh BTC to its holdings.

Even though U.S. investors keep showing an increased interest in Bitcoin, the SEC is yet to allow the listing of a spot bitcoin ETF in the country, triggering buyers to seek alternative avenues, like derivatives-based offerings and those that invest in Bitcoin-related securities.