Oct. 20, 2021
Dear Chairman Gary Gensler, Please approve as soon as possible the conversion of Grayscale Bitcoin Trust into a Bitcoin ETF that will hold, purchase and redeem actual bitcoin. I realize that you would like to use ETFs as leverage to force compliance rules on bitcoin exchanges to identify and report fraud and price manipulation to help insure greater investor protections. However, holding up GBTC's conversion while allowing Bitcoin Futures ETFs to progress ignores the fact that the futures contracts still settle on their prices based on the same information derived from the bitcoin underling. Price discovery is important, but Futures ETFs do NOT avoid any price manipulation problems anymore than a true Bitcoin ETF that would hold actual bitcoin. When thinking of the word "protection," do you NOT also consider that investors believe that they are MORE PROTECTED by investing in an ETF that holds actual bitcoin and one that allows actual redemptions in bitcoin? Access to actual bitcoin is protection to the majority of investors who would buy into such an ETF. Furthermore, the longer that you delay people being able to invest in bitcoin through trusted means, such as our current financial markets, the more likely that they will use back alley means with less protections. As I am sure you know, when Canada and Germany approved Bitcoin ETFs, GBTC started trading at large discounts to NAV. Money flowed out of GBTC and into Canadian and German Bitcoin ETFs that, due to their structure, could offer lower fees. The large discount that GBTC is trading has made GBTC appear a less attractive investment opportunity, and it is a problem that would be immediately fixed by allowing conversion into a bitcoin ETF. It seems quite unfair to allow U.S. investors to suffer losses due to your slow movement in approving Grayscale Bitcoin Trust's conversion. Other countries are attracting funds that would otherwise have been destined for U.S. markets because you are acting too slowly. Money flowing out of the country and harming U.S. investors should also be concerning to you. I sure hope that you will move swifter than your current pace to approve GBTC's conversion into a bitcoin ETF. Bitcoiners believe in HODLing, and Futures ETFs simply do NOT fit the bill. Grayscale has used its current Bitcoin index successfully for more than 6 years. I agree with Grayscale that the XBX Index "(i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Bitcoin reference rate, (ii) provide a real-time, volume-weighted fair value of bitcoin and (iii) appropriately handle and adjusts for non-market related events." I also agree that "the CME futures market is a significant, surveilled and regulated market that is closely connected with the spot market for Bitcoin and may fulfill the requirements for surveillance sharing given the Exchange’s ability to obtain information from markets and other entities that are members of the ISG to assist in detecting and deterring misconduct." Thank you for your time and please help protect Grayscale Bitcoin Trust Investors by approving the conversion to a true, spot Bitcoin ETF. -- William Mike Barnes