Feb. 22, 2022
Hi, Thank you for reading my comments. I don't understand the continued denials of spot Bitcoin ETF applications. As a small investor, I do not feel the SEC is protecting me by doing so. Rather, it is quite the opposite. I made the decision a year ago to gain exposure to BTC in my IRA. The only option at the time was GBTC. A year ago it was trading at a small premium and I decided to make a fairly substantial purchase. Since that time, the Bitcoin price is down about 20%. I can accept that as the risk of making the investment. However, my investment is down 45% due to the small GBTC premium turning into a 25% discount today. My understanding is that the discount would be eliminated with the conversion to an ETF. This would help myself and countless other investors like me in the same predicament. In my mind, conversion to an ETF, eliminating a discount for structural reasons is the definition of investor protection. Why does the SEC keep rejecting applications? From what I can tell, the reasons for rejection are centered around two areas; volatility and potential for manipulation. As to the reason of volatility, I would ask the commission to look at how Bitcoin's volatility compares to currently approved triple levered ETF products. I would venture a guess that there are currently approved ETFs that are more volatile than an unlevered spot Bitcoin ETF. So why does Bitcoin's volatility become a reason for rejection? To the reason of market manipulation, I would ask the SEC to look into how futures markets get their pricing. There are only so many exchanges trading bitcoin. The futures ETFs and spot ETFs would have access to the same exchanges to provide some kind of TWAP/VWAP pricing. I'm not going to pretend to be an expert in securities laws. I understand that the futures ETFs register under a different investment Act than spot ETFs and they may have different hurdles. Without getting into the nuance for each, I would ask the SEC how they are protecting investors by not allowing a spot ETF that would rely on the same underlying pricing mechanisms that futures ETFs currently use. In close, with the continued denial of spot ETFs, US investors who wish to gain bitcoin exposure through a regulated product are left with two inferior options; a closed end fund that trades at a 25% discount or a futures ETF that is subject contango roll bleed of up to 10% per year. I just want a regulated product that closely tracks the price of bitcoin like citizens of many other countries currently have. Is the risk of fraud in pricing really greater than that in a futures ETF that relies on the same pricing and is subject to a 10% discount? Is it greater than losing 25% of your investment to a closed end fund discount? I urge the SEC to reconsider its position on spot ETFs in the name of investor protection. Thank you, Nick Neelis