Feb. 7, 2022
I am writing in full support of the proposal to transition the Grayscale Bitcoin Trust (GBTC) into a spot ETF tied to Bitcoin (BTC). As an investor in GBTC, I have experienced that the current SEC stance runs counter to the stated objectives of that institution. The SEC states that it wishes to protect investors, and minimize the chances of fraud or market manipulation. However, for investors who wish to have exposure to BTC through traditional investment vehicles, such as an IRA or 401k, GBTC remains one of the few options available. This forces many investors to invest in GBTC by necessity, and suffer reduced investment yields and increased risk because of the limitations of the current GBTC design. As compared to investing in BTC directly, as of today the typical investor has lost over 27% of their investment value simply due to the fact that GBTC is not structured as a spot ETF. This is based on the current price of GBTC as compared to the Native Asset Value (NAV) of the underlying BTC which Grayscale holds in association with this Trust. In the past, this differential has been positive and as much as 132% in favor of the GBTC investor. Because the price of GBTC is unhinged from the actual value of BTC, this leads to significant potential for market manipulation as demonstrated above. There are times when it’s been significantly overvalued as compared to the actual holdings of the trust, and times like now when it is significantly undervalued. Neither of these wide swings is consistent with the SEC goals of stabilizing markets, eliminating fraud, and protecting investors. Wide swings such as this would be essentially eliminated by allowing the transition of GBTC into a spot ETF, tied directly to the true BTC value. This would not only greatly reduce the opportunity for manipulation or fraud, but would also immediately return nearly 27% of locked value to investors, who have often been required to choose GBTC because of the limitations of their IRA and/or 401k funds. Preventing the realization of 27% value is not protecting investors in any way, and is something the SEC should immediately seek to correct. Given this opportunity to unlock investor value, it further makes no sense that a BTC futures ETF has been approved and yet a spot ETF has not. The futures market is much more volatile, much riskier, and much more difficult for the average investor to understand and succeed in. The SEC has already validated a futures ETF as a legitimate vehicle, and it is puzzling that the more traditional and investor-friendly spot ETF remains in limbo. Finally, if this GBTC spot ETF conversion is not approved, it will cause even more investors to purchase BTC directly (when possible) which can be accomplished in a wide range of unregulated markets worldwide. Or, invest in spot BTC ETFs which have been approved in other countries. It would make sense that the SEC would prefer to have BTC-based investments managed through a GBTC spot ETF, which can be more easily regulated and ensure that cryptocurrency investments remain within the jurisdiction and oversight of the United States. Thank you for your consideration, Christopher Cable