Grayscale’s CEO questioned why regulators have not yet approved a Bitcoin ETF, as current Bitcoin futures ETFs end up entering the same market.
The ongoing question of whether US regulators will approve a Bitcoin cash market fund has become “a political issue“, according to Michael Sonnenshein, CEO of digital asset manager Grayscale.
Speaking at the event “Crypto Goes Mainstream” hosted by Decrypt and Yahoo Finance, Grayscale CEO Michael Sonnenshein said the debate has now spread beyond the “investment community” to attract politicians.
“Last week we saw bipartisan support for an Emmer and Soto Bitcoin spot ETF.”
He said, referring to the bipartisan letter sent by Rep. Tom Emmer (R) and Rep. Darren Soto (D) to SEC President Gary Gensler.
In the letter, Emmer and Soto questioned why the SEC was prepared to pass a Bitcoin futures ETF, “you’re not as comfortable or more comfortable allowing Bitcoin-based ETF trades to start at sight“, given that the Bitcoin futures ETF basically tracks the price of the same asset.
In the past, the SEC has repeatedly denied requests for an ETF linked to the Bitcoin spot market, while recently approving several future Bitcoin ETFs.
Sonnenshein picked up on the argument presented by the Reps. Emmer and Soto, noting that the SEC, “is really just concerned with the underlying Bitcoin market, things like price manipulation in regulated markets of significant size.”
According to Sonnenshein, the cryptoactive industry – and now politicians – are arguing that,
“If you are comfortable with derivatives […] and the futures contracts are getting their prices from the spot market itself, so you’re also inherently saying that you’re comfortable with the spot market.”
He added that when presented to commodity-based ETFs “easily stored“, like gold, “you saw investors gravitate towards the product that physically holds that commodity, although there are derivative products, products based on futures“.
While the SEC has repeatedly highlighted Bitcoin’s volatility in warnings to investors, Sonnenshein argued that,
“Investors investing today are doing this knowing full well that cryptocurrencies and their investments will inherently have volatility associated with them.”
Adding this volatility ” has been inherent in the asset class from the beginning.“. The emergence of cryptoactive derivatives acted as a catalyst for an influx of new investors into cryptocurrencies, he said, noting that,
“These are the kinds of tools that investors are used to having at their disposal when thinking about accessing an asset class.”
Grayscale has long aimed to turn its flagship product, the Grayscale Bitcoin Trust ( GBTC ), into a full-featured Bitcoin ETF. In October, the digital asset manager filed a formal request with the SEC to convert the GBTC into an exchange-traded fund backed by physical Bitcoin. The company announced its intention to do so in April, noting that the company is “100% committed to converting GBTC into an ETF” is that “timing will be determined by the regulatory environment.”.