GBTC approval could return a “couple of billions of dollars” to investors: Grayscale CEO
Grayscale Investments CEO Michael Sonnenshein “can’t imagine” why the United States Securities and Exchange Commission (SEC) “wouldn’t want” to protect Grayscale investors and return the true asset value to them, in a recent podcast interview.
In an interview with What Bitcoin Did, a popular podcast hosted by Peter McCormack, on February 25, Sonnenshein explained that the SEC “violated the Administrative Procedure Act” by denying Grayscale Bitcoin Trust (GBTC) an approved spot-BTC exchange-traded fund (ETF), in June 2022.
He explained that this action ensures that the regulator does not show “favoritism” or act “arbitrarily”, adding that by approving the Bitcoin Futures ETF, and not approving “GBTC’s conversion”, the SEC has acted “arbitrarily”.
Sonnenshein noted that when the SEC began approving the first Bitcoin ETFs, Grayscale took it “as a sign” that the SEC was “actually changing its stance on Bitcoin.”
He stated that there is actually a “couple of billions” of capital that would immediately go straight back into investors’ pockets, on a nightly basis, as the fund would “bleed back” up to net asset value.
Sonnenshein explained that this is because GBTC currently trades at a discount to its net asset value (NAV), but if it were to convert to an ETF, it would “no longer” be a discount or a premium, it would be an “arbitrated mechanism ” embedded.
He reiterated that Grayscale is in the process of “suing the SEC now” and could have a decision challenging the SEC denial as late as “fall 2023.”
He also noted that Grayscale has over a “million investor accounts” with investors worldwide who trust the firm to “do the right thing for them” and “can’t imagine” why the SEC wouldn’t want to “protect” investors” and ” return that value” to them.
Sonnenshein added that he will not “sway” from the fact that Grayscale has a “commercial interest” in this, and said that if the application to challenge the SEC is denied, Grayscale may be able to appeal the case in the US Supreme Court.
Related: SEC’s ‘One-Dimensional’ Approach Slows Bitcoin Progress: Grayscale CEO
This comes after the SEC denied Grayscale’s application to convert its $12 billion Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin ETF, in December 2022, basing its decision on findings that Grayscale’s proposal did not adequately protect against fraud and manipulation.
The agency had made similar findings in a number of previous applications to create spot-based BTC ETFs.
