The CEO of the investment firm operating the sphere’s biggest bitcoin fund sounded off on comments made by Securities and Exchange Commission Chair Gary Gensler about the likely approval path for the first U.S. bitcoin ETF.
Michael Sonnenshein, CEO of Grayscale Investments, warned on Tuesday that the SEC can be making a mistake if it granted approval to an ETF based on bitcoin futures ahead of one tied to the cryptocurrency itself. His firm has been in the hunt for to convert the massive Grayscale Bitcoin Belief, which owns bitcoin rather than contracts tied to its future stamp, into an ETF.
“It’d be shortsighted of the SEC to allow a futures-based product into the market prior to a position product,” Sonnenshein suggested CNBC’s “Squawk Box” on Tuesday. “They really must be allowing both products into the market at the same time and let traders consume which way they want.”
Last month, Gensler signaled a preference for reviewing applications from investment companies in the hunt for to launch ETFs tied to bitcoin futures that trade on the Chicago Mercantile Exchange. That’s an alarming construction for Grayscale, which has sought to convert its bitcoin have faith into an ETF since 2016. The approval of the first bitcoin ETF in the U.S. is viewed as a crypto milestone because it would aid in the adoption of the nascent asset class.
For the duration of the “Squawk Box” discussion and in a apply-up phone interview, Sonnenshein warned of potential downsides to the SEC’s position. A futures-based ETF would payment traders more in charges because of the inherent expense of rolling over futures contracts as they expire, Sonnenshein said.
Additional, traders who want an investment fund that more carefully tracks the value of bitcoin may gravitate toward a futures-based ETF, which may siphon away capital from the flagship Grayscale product, he said. That’s one of the main reasons Grayscale wants to convert its fund, identified by its ticker GBTC, to an ETF. As at the second constructed, the fund can trade at a bargain or top rate to bitcoin itself.
“If a futures-based ETF comes to market with out the ability for GBTC to convert to an ETF, it has the potential to harm traders who preserve tens of billions of dollars’ price of GBTC today outright, as wisely as the traders who have exposure to GBTC inside of mutual funds, retirement accounts and other places,” Sonnenshein said in the phone interview.
Overall, he viewed the SEC’s stance as bullish for bitcoin because if regulators are comfortable with derivatives tied to the cryptocurrency, it suggests they are comfortable with the underlying asset class.
Grayscale’s bitcoin have faith has $32.4 billion in assets below management and holds more than 3% of the available provide of bitcoin, Sonnenshein said.
The SEC did no longer immediately respond to a quiz for a reaction to Sonnenshein’s comments.
This account is constructing. Please take a look at back for updates.
Turn into a smarter investor with CNBC Pro.
Regain inventory picks, analyst calls, bizarre interviews and access to CNBC TV.
Designate up to start a free trial today.