May. 06, 2022
Dear SEC, I write to you as yet another GBTC shareholder, in support of converting the Grayscale Bitcoin Trust to a spot-based ETF. By refusing to approve this conversion, you prevent Grayscale from properly serving long standing customers like me. As I am sure you are already aware, Grayscale is one of the largest, most respected and visionary investment firms in the cryptocurrency marketplace. If it was not for their understanding of the value of the cryptocurrency space in the first place, we undoubtedly would not be having this conversation at all--about any company. Investors deserve to have the value of their assets reflect the value of their holdings, and without an ETF approval, this does not seem to be otherwise feasible. In a sign of embracing the future of cryptocurrency, the SEC boldly approved a Bitcoin ETF, but for reasons that still make little sense to anyone, you choose to only approve a futures-backed ETF, a move that adds long term complications--and more importantly undue expense--to the price investors have to pay for exposure. Given that investors in assets like gold use both vehicles to gain exposure to the same underlying assets, investors in Bitcoin should likewise be able to choose whether they would like direct or futures-based exposure to Bitcoin. Allowing investors access to BOTH spot AND futures exposure provides the necessary flexibility required to react to whatever is happening in the market. And while I wholeheartedly applauded the SEC's embracing of Bitcoin last October, it just doesn't settle right that the SEC continues to deny GBTC and its investors the opportunity to trade BTC in real-time as a spot ETF. Not only would such a fund be simpler and less costly to manage, but casual investors who may not necessarily understand the intricacies, embedded costs, and unique risks associated with futures trading, will no longer be forced to invest with some degree of uncertainty into a more complex vehicle in order to add BTC exposure to their portfolios. Every other asset marketplace offers spot-backed ETFs, yet the SEC continues to reject applications for a similar spot-backed Bitcoin ETF. This does not make sense and further erodes the trust the American people--particularly at the retail level--have in both the SEC's support of Main Street investors like myself and the notion that Wall St is a FAIR marketplace for everyone involved, not just the market makers, bankers, and big players. The discount to NAV in GBTC has been around 25%, on average, this year. There is simply no reasonable explanation for allowing this discrepancy to continue to exist. I have been a very long-term holder of GBTC. I've held this asset through BTC's ups and downs over the years and it is my financial investment that allowed Grayscale to add Bitcoins to their fund. But now the fund itself is worth more than the value of my shares. If GBTC is once again denied the ability to become an ETF, investors are going to lose even more--if not all--of their investment as even fears around non-conversion drive investors even further from the GBTC fund. And in the end, what happens to the $30 Billion worth of Bitcoins that investors like myself helped Grayscale to acquire? The uncertainty surrounding the answer to that question really scares me. GBTC is the world’s largest publicly-traded cryptocurrency fund, with hundreds of millions in daily trading volume and 3.4% of all outstanding Bitcoins. Knowing the SEC has already embraced BTC futures trading, but remains inexplicably staunch in its opposition to a simple spot ETF feels like reckless malfeasance on the part of the SEC: the very agency whose mission is to protect investors like myself. Despite the tone of my frustration, I still wish to express my gratitude for the opportunity to share my views with you in the sincerest of hopes that you will approve this common-sense conversion to protect the interest of long-standing investors like me. Sincerely, Benjamin Armbruster