May. 09, 2022
Dear Sir/Madam, I write to you as a GBTC shareholder, in support of the conversion of Grayscale Bitcoin Trust (OTCQX: GBTC) — the world’s largest publicly-traded cryptocurrency fund — to an ETF. By not approving this conversion, you are not protecting me, the investor – the very person you were appointed to protect. Last October, you approved futures-backed Bitcoin ETFs, but continue to reject applications for spot Bitcoin ETFs. Given that investors use both vehicles to gain exposure to the same underlying asset, Bitcoin—from which both vehicles derive their prices—we, as investors, should be able to choose if we’d like direct or futures-based exposure to that asset. Having spent a career (30 years) managing money and investing in futures, options and other derivative securities, I have personally chosen GBTC as my preferred means of gaining bitcoin exposure. Your continued refusal to approve this ETF is causing financial harm and I urge you to use your powers to approve the GBTC conversion to an ETF at the very soonest. The discount to NAV in GBTC has been around 25%, on average, this year. This means that the price of GBTC is less than the price of Bitcoin, the asset itself. Given that GBTC has about $30bn in AUM, shareholders like me are experiencing a destruction of value of around $7.5 billion. I’m writing from Kentucky, with gratitude for the opportunity to express my view and with the hope that you will approve this conversion and protect the interest of investors. Sincerely, Kevin Paley Principal and Founder Red Team Ventures, LLC