Grayscale’s ambitious plans to launch Bitcoin ETF may not work well

A variety of factors have to be in sync for optimum benefits
  • Grayscale is one of the world’s biggest providers of crypto exchange-traded products (ETPs)
  • Bitcoin Trust is one of its most ambitious projects as of a date; however, currently dealing with a negative premium
  • Competition from other industry titans may have been why the firm pushed into the business

A month since its most ambitious and most significant undertakings hogged the headlines the world over, Grayscale Bitcoin Trust (GBTC) has decided to claw back after being in red interest rates for so long.

Competitive pressure a key factor

It is well known that there have been several applications with the SEC to greenlight Bitcoin exchange-traded funds (ETFs) in the recent past, with WisdomTree and Kryptoin being some notable examples. Fidelity, a titan in the FinTech industry, is also increasingly eyeing a piece of the crypto sector. All these factors combined may have pushed Grayscale to announce its recent move of converting about 75% of its $61 billion worth of ETP assets under management (AUM) into a GBTC ETF. This is, however, possible only if the SEC approves the operation, which the company’s top brass is hopeful of. Moreover, certain investors are also unhappy with the current situation, thus causing further urgency in this announcement.

A comprehensive guide to ETF goal

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The company has offered a fixed approach towards making its ETF goals a reality in its announcement. The first step would involve the launch of a private placement whose share will be controlled by Grayscale and available only to its wealthy investors. The next step would include obtaining a rough market cost estimate as GBTC offers investors exposure to several tokens, including Ether, Bitcoin Cash and Litecoin. The third and fourth steps involve the SEC having oversight over its funds by regular reporting of funds and converting such funds into cryptocurrency ETFs. However, no timelines have been set for review of each step along the way.

Until such a time, Grayscale has taken small but significant steps, such as announcing its roadmap and allowing Digital Currency Group, which owns Grayscale, to up to $250 million in GBTC shares. Moreover, the company has also launched new tokens which have an added emphasis on DeFi and privacy.

Even as it is uncertain how the whole issue would end up, the recent announcement is undoubtedly a welcome one for the company and is bound to rile up its competition.

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Andrew Smith
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing

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