Proactive Investors - Grayscale Bitcoin Trust (GBTC), the world’s largest pure bitcoin investment vehicle, has narrowed its discount to 35% against US$18.3bn of bitcoin under management.
Although this remains a steep discount for the beleaguered trust, it’s a marked improvement from the nearly 50% discount inflicted upon shareholders at the start of the year.
GBTC has been running at a discount since as early as February 2021, with even the unprecedented crypto rally later that year failing to bring the fund to parity with its underlyings.
A subsidiary of Digital Currency Group, Grayscale has struggled to do good by the 850,000-plus shareholders of its flagship GBTC fund who are unable to redeem their shares due to the fund’s structure.
Grayscale has been in a protracted battle with the US Securities and Exchange Commission (SEC) to convert the trust into a spot exchange-traded fund (ETF), but the regulator under crypto-sceptical chair Gary Gensler has steadfastly refused despite allowing for futures ETFs.
Grayscale Bitcoin Trust versus the SEC
Converting to an ETF would allow traders to arbitrage the difference and potentially bring the fund’s share price to parity, but Gensler has nixed Grayscale’s plans on the grounds of protecting “investors and the public interest” since the proposal failed to demonstrate how it is “designed to prevent fraudulent and manipulative acts and practices”.
In a fresh petition filed in January 2023 before the US Court of Appeals, Grayscale called the SEC’s refusal “arbitrary to its core” and “illogical” given the SEC’s granting of permission for bitcoin futures contracts.