Grayscale, Bitwise Confident a Spot Bitcoin ETF Will Be Approved Soon

AUSTIN, Texas — Investment firms Grayscale and Bitwise said they were optimistic that a spot bitcoin ETF would finally be approved by the SEC soon at CoinDesk’s Consensus 2022 in Austin, Texas, on Thursday. (Grayscale is owned by DCG, the parent company of CoinDesk).

Both Grayscale, which runs the world’s largest bitcoin fund, the Grayscale Bitcoin Trust (GBTC), and Bitwise face impending deadlines for their spot bitcoin ETF applications to the SEC. Grayscale’s proposal to convert GBTC to a spot bitcoin ETF is going through a public comment period with the deadline for the SEC’s decision coming on July 6, while the deadline for the Bitwise decision is June 29.

“There’s a perception in the crypto industry that the SEC is just saying no, and that’s now what the facts show,” said Matt Hougan, Chief Investment Officer for Bitwise.

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Hougan pointed out that the SEC has approved a limited interval market, then bitcoin futures ETF based on the 1940 Investment Act, and then more recently, two bitcoin futures ETFs based on the 1933 Investment Act, the same act that spot bitcoin futures ETFs have been filed under.

“That’s a progression that ends in a spot bitcoin ETF,” Hougan said. “So they really are making progress just not at the pace of the crypto community. But it’s wrong to see them as just [holding things up].

David LaValle, Global Head of ETFs at Grayscale, agreed. “It’s not that long ago that there really was a question of if this was going to happen,” LaValle said. “And now it’s clearly a question of when it’s going to happen.”

LaValle noted further that if the SEC rejected Grayscale’s application by July 6, the company would be “very focused on addressing all options.”

Lori Tiernan, the chief strategy officer for Valkyrie, was also on the panel and was also sanguine that a spot bitcoin ETF would be approved, although she said she expected it to come in the next several years.

Last month, the SEC approved Valkyrie’s application for a bitcoin futures ETF, the second such ETF to win approval under the Securities Exchange Act of 1934, leading to greater optimism about the approval prospects of a spot bitcoin ETF.

Bitwise’s Hougan also said he believed a spot bitcoin ETF would not initially grow as large as some in the bitcoin community were expecting.

“I think the perception is that Day 1, a bitcoin ETF launches and Day 2 it has $30 billion in assets, and that’s just not the way ETF works,” Hougan said. “GLD is the fastest-growing ETF of all time, it hit $1 billion in three days, then hit $3 billion after a year, andafter five years, it hit $30 billion.

“I think the effect of a [spot bitcoin] ETF will be overhyped before it launches, and then people will dismiss it, and eventually, it will be the largest way that investors will hold bitcoin,” Hougan concluded.

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