Feb. 28, 2022
Dear SEC, I’m writing to support the conversion of Grayscale Bitcoin Trust (Symbol: GBTC), currently the world’s largest Bitcoin fund, to the first Spot Bitcoin ETF in the United States. I am a resident of Pennsylvania state and am writing to SEC today to express my concerns for not approving the SPOT Bitcoin ETF in the USA. Recently, SEC approved BITO ETF which is a Bitcoin future ETF. This investment vehicle has legitimate concerns which is exposing investor to much higher level of risk compare to the underlying asset performance (Bitcoin in this case) which are as below, Since BITO or any other Bitcoin Future based ETF is based on the future market, its by nature based on speculation of price movement investor anticipate rather then the actual value of the underlying asset (Bitcoin). This makes it much more riskier and volatile and offers much less capital protection compared to an actual spot price of the asset. Bitcoin Future ETF poses higher level of risk in terms of investor loosing their investment value faster compared to the underlying asset performance. This is true even if the underlying asset prices stays at par. This is because future ETF is exposed to contango effect which occurs as it forces the ETF operator to renew their future contracts periodically. This itself is a double edge sword, since it may end up paying higher future prices of the contracts compared to the actual value (spot price) of the asset (Bitcoin)) as well as it accrues unnecessary expense resulting from contract renewal which investor has to pay unnecessarily. Future ETF are so expensive to own for a long term investor since it charges ridiculous amount of management fee which ranges from 2% to 3% per year. This aids in eroding investor capital much faster compared to traditional spot ETF which has significantly lower expense ratio. As we can see, its much more volatile then the underlying asset spot performance, its not suitable for investors and exposes investors to unnecessary added risk. If SEC has approved the Future Bitcoin ETF like BITO despite all this concerns , it does not make any sense to block the approval of spot Bitcoin ETF which eliminates all this investor concerns. Below are the advantages of spot Bitcoin ETF It allows investors to own Bitcoin at the current price without dealing with the complexities involved in acquiring physical Bitcoin Since spot ETF does not have to renew contracts on a periodic basis, it is not exposed to contango risk. Spot EFT simply buy and holds the Bitcoin, its more like a passive ETF then an active one like Future ETF. This will benefit investor with lower expense ratio to make their hard earned money work harder. Spot ETF can be bought and sold based on the price that investor currently see in the market and not based on the speculation investor makes on the future. I request SEC to kindly review this concerns of Future ETF that individual investor faces and the benefits spot ETF offers over this issues. Bitcoin spot ETF will be the only best and easiest way to make Bitcoin available to the mass US investors to their advantage that can eliminate all added risk involved with future price movements compared to the actual value of Bitcoin. I hope SEC will takes investors concerns into consideration to better protect them from added risk. Sincerely, Nilesh Radia