February 19, 2022
GBTC and other greyscale funds allows individual investor to invest in well established cryptocurrency products indirectly. This decreases the risk to the individual investor, as they are not subject to hacking/theft risk that is present by purchasing the underlying cryptocurrency directly.
Not all cryptocurrency is created equal some are substantially more speculative than others. By forcing the greyscale funds to remain as closed end funds, the SEC introduces tracking error to said funds. This encouraging retail investors to go and purchase cryptocurrency on poorly regulated cryptocurrency exchanges, where are exposed to the aforementioned hacking risks, in addition to direct short term market manipulation.