May. 11, 2022
Dear SEC, I am in favor of approving the Form 19b-4 that NYSE Arca filed with you to convert Grayscale Bitcoin Trust (OTCQX: GBTC) – the world’s largest publicly traded crypto asset fund, with approximately $30 billion in AUM, hundreds of millions in daily trading volume, more than 850,000 investors, holding approximately 3.4% of all Bitcoins outstanding – into a Bitcoin Spot 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 investors. Multiple spot ETFs or ETPs are available in advanced countries like Canada, Europe and Australia, some of them have been running smoothly with no issues, and there is no reason why this should not be made available for US investors as well. Investors understand the risks of investing in new tech like crypto assets, it is no different from investing in early loss-making start ups. And recently, the US market has experienced massive volatility, a lot of well established companies have seen massive decline right after disappointing earnings were released, and smaller companies could be sold off 40% or more after earnings. I must also mention, the vast amount of leveraged commodities, index ETF, ETP in the market, some of them have blown up in the past, for example 3x long oil ETF. But these extremely risky leveraged product and their failure did not stop the same type of products being approved again and listed in the market. Therefore, as an investor I disagree with the “protect investor” reasoning behind not allowing a spot ETF, a. It is said that market manipulation is also a concern behind the decision to not approve a spot ETF conversion. In reality, we understand that manipulation always exists in the market, especially in the futures market, so it really makes little sense to me why future based product is approved but not the actual spot product. Also, the reduced fee would also benefit the investors tremendously from its current high fee. I hope that the SEC could seriously consider approving Grayscale’s application to convert GBTC to a spot ETF, the United States should be leading innovations, not stopping innovations, and by baring the conversion, the SEC is essentially punishing more conservative investor like myself who prefer to gain crypo asset exposure in the tradition stock market than in the crypto exchanges to go straight to the more risky and less regulated crypto exchanges. My decision to invest in GBTC has costed me tremendously and honestly, SEC should protect investors like myself in this case, when the product is clearly not able to function properly, the SEC should allow it to transition, Grayscale has been in the space for a long time and they are more than capable of managing a spot product well. Sincerely, Timothy Wong