Feb. 25, 2022
Dear SEC, I’m resending this comment as my earlier comment from 2/22/2022 is not yet reflected on the website (https://www.sec.gov/comments/sr-nysearca-2021-90/srnysearca202190.htm). I’m an investor in GBTC and I’m writing to support the conversion of Grayscale Bitcoin Trust (GBTC) to a Spot Bitcoin ETF. ETFs based on the CME bitcoin futures have already been approved. These futures settle to the CME CF BRR reference rate, which is calculated from transactions from major bitcoin spot exchanges. GBTC expects to track the XBX (CoinDesk’s bitcoin price index) and uses data from four exchanges, three of which are from the same venues that are used for the calculation of CME’s CF BRR reference rate (Coinbase, Kraken, Bitstamp). Since these two reference indices (BRR and XBX) use largely the same data venues, which are large, prominent, and transparent exchanges, concerns about pricing should be small. As another counterpoint to concerns about pricing issues with Bitcoin exchanges, ETFs have been approved in the US that use non-exchange traded, OTC instruments (such as IVOL which uses OTC interest rate swaptions). There is no verifiable market for retail participants to check where these are marked. Bitcoin spot trades 24/7 at many liquid exchanges and prices can be easily verified. Many bond ETFs exist in the US (HYG is one example) that have underlying corporate bonds that do not trade frequently and often have stale prices. There is minimal concern regarding accurate pricing for these ETFs, so concerns about bitcoin price manipulation on large exchanges are perhaps misplaced. The massive discount of GBTC vs. NAV is harming investors: its approx. $25 billion AUM is currently at a ~25% discount from NAV. This massive discount (both in % terms and $ terms) will be resolved via an ETF conversion to the benefit of US investors. Multiple spot-based bitcoin ETFs/ETPs trade in other developed countries (Canada, Australia, Germany, Switzerland). These have traded extremely close to NAV even during periods of very high volatility, including 2 periods of >50% drawdowns (first in summer 2021 and the second which is ongoing). This provides support that a US spot ETF will be able to meet its objective of closely tracking bitcoin price which GBTC is failing to do in its current form. Thank you for your time and attention. Sincerely, Salil Aggarwal