May. 10, 2022
Dear SEC, I am T. Russell Nobile, Senior Trial Attorney at Judicial Watch, Inc. Judicial Watch is one of the largest government transparency organizations in the United States. I write today in favor of approving the Form 19b-4 that NYSE Arca filed with you to convert Grayscale Bitcoin Trust (OTCQX: GBTC) into a Bitcoin Spot ETF. The Commission’s inconsistent approach to Bitcoin ETFs and Bitcoin Futures ETFs raises serious questions regarding the Commission’s ability to protecting consumers. Admittedly, the Commission needs time to formulate its policies towards BTC and BTC-related products. However, the lack of an easy, familiar process for public investors to acquire BTC is injuring both existing and future public investors that wish to invest in a BTC-backed ETF. This year, GBTC has traded at an approximately 25% discount to its NAV, which means the price of GBTC is less than the price of its underlying assets, Bitcoin. With approximately $30 billion in AUM, that results in approximately $7.5 billion of trapped value from existing U.S. investors. But it is not just existing GBTC investors that are injured by the delay in approving GBTC’s application. Denying GBTC’s application injures (rather than protects) prospective investors. Without a tradeable ETF investors seeking BTC exposure are forced to engage in more risky means of acquiring BTC often at higher costs. Generally, investors that seek BTC will educate themselves on the asset class. However, once investors learn about the asset they often still lack the technical expertise needed to acquire and hold BTC securely and at reasonable costs. Unquestionably, GBTC allows investors to get exposure without the technical risks that come from holding BTC outright. Finally, a BTC-based ETF would make it easier for the Commission’s achieve its policy objectives. Whatever the Commission’s future policy objectives, such objectives will be easier to implement over a US-regulated ETF that holds bitcoin rather than a decentralized or international entity beyond the Commission’s authority. Approval of GBTC’s application will remove the disincentives that prevent US-regulated entities influencing this growing marked. Sincerely, Russ Nobile