May. 10, 2022
Dear SEC, 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. Investing an ETF tied to a rolling futures contract leaves investors with "synthetic" exposure, which is subject to significant basis risk. Data show that ETF's which aim to mimic exposure through the use of futures contracts result in significant daily downside tracking error and higher fees, which are magnified to the detriment of investors as the holding period increases. It's in the interest of the public to have investment products that are low-cost, transparent, and safe to own in the long-term. The current ETF's based on opaque futures strategies are designed to generate high fees for asset managers, to the detriment of the investing public. Furthermore, 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 California, 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, Scott Krivokopich