Grayscale hints at plans to convert Bitcoin trust into BTC-settled ETF

Grayscale appeared to be seeking to reconstitute its Bitcoin Trust into a physically-backed fund when the SEC approved a Bitcoin futures ETF.

Institutional investment big Grayscale is reportedly considering changing its Bitcoin Trust into a physically settled exchange-traded fund (ETF).

On Oct. 17, Barry Silbert, the corporate executive of Grayscale’s parent company Digital Currency cluster, hinted that Grayscale is preparing to convert its Bitcoin Trust into a spot-settled Bitcoin fund.

After having taken to Twitter to criticize the cash-settled Bitcoin futures ETF recently approved by the U.S. Securities and Exchange Commission (SEC), Bitcoin commentator Preston Pysh chimed in to raise Silbert once Grayscale’s Bitcoin Trust would be reborn into a BTC-settled ETF. “Stay tuned,” Silbert responded.

However, Grayscale Bitcoin Trust investors seem to have been unsettled by Silbert’s remarks, with Twitter user “svrgnindividual” questioning what a reconstitute would mean for investors holding shares in Grayscale’s Bitcoin Trust.

“What happens to us Grayscale investors once the spot ETF is approved? Is our investment reborn into ETF shares?” they tweeted.

Rumors of Grayscale’s putative ambitions for a Bitcoin ETF began late last week when a CNBC report citing anonymous insiders claimed that Grayscale was expecting the Securities and Exchange Commission to finally approve a Bitcoin ETF.

On Oct. 15, the SEC declared it had accepted the registration of securities from ProShares Trust’s futures-based Bitcoin (BTC) exchange-traded fund. ProShares’ ETF offers investors exposure to contracts that speculate on the longer term worth of BTC that area unit settled in money.

Despite the ETF’s approval being cited as the primary catalyst for Bitcoin’s recent optimistic market action, several analysts have criticized the fund for its cash-settled structure, instead advocating for the SEC to approve a Bitcoin ETF that’s backed by and settled in BTC.

According to Grayscale’s latest holdings update on Gregorian calendar month. 15, the firm boasts $52.6 billion in assets under management (AUM) — seventy three of which is in command within the Bitcoin Trust. The info suggests that Grayscale’s Bitcoin stash contains roughly 620,000 BTC or 3.3% of Bitcoin’s total offer.