Grayscale CEO Cheers BlackRock’s Entry into Bitcoin ETF Space

  • Grayscale Investments CEO, Michael Sonnenshein, sees BlackRock's Bitcoin ETF filing as a "moment of validation" for Bitcoin, underscoring the digital asset's legitimacy and endurance.
  • Grayscale, known for offering Bitcoin exposure through its Bitcoin Trust (GBTC), is also seeking to convert GBTC into a spot Bitcoin ETF, providing a simpler and more protected investment pathway for investors.
  • Bitcoin's price increased substantially after BlackRock's filing, emphasizing the potential impact of mainstream financial institutions' involvement in the crypto space.

BlackRock, the world’s largest asset manager, entering the Bitcoin exchange-traded fund (ETF) race underscores Bitcoin’s legitimacy as an asset class, says Michael Sonnenshein, CEO of Grayscale Investments. This significant development marks a ‘moment of validation’ for the cryptocurrency, Sonnenshein noted in a CNBC’s Last Call interview aired on July 12, 2023.

Sonnenshein dismissed the idea that BlackRock’s foray into the Bitcoin ETF arena somehow dampened Bitcoin’s appeal. “To see the largest asset manager in the world publicly advancing their crypto efforts only affirms the credibility of the asset class and its lasting power,” he stated, emphasising its relevance even in the South African market.

Over the past month, no less than seven major institutional firms, including BlackRock, have applied for a spot Bitcoin ETF in the United States. “The ETF wrapper is a well-established, trusted instrument, serving as the access point for a variety of assets, be they commodities or stocks,” Sonnenshein explained.

He further accentuated Bitcoin’s enduring presence, saying, “Bitcoin is not disappearing. Investors want, and indeed have the right to, access it.”

Historically, Sonnenshein’s Grayscale has provided a backdoor route for U.S. investors to gain Bitcoin exposure by allowing them to trade shares in trusts holding substantial Bitcoin amounts via its Grayscale Bitcoin Trust (GBTC). However, Grayscale aims to transition GBTC into a spot Bitcoin ETF, offering investors a more straightforward approach to trading Bitcoin’s price without the GBTC’s inconvenient discount to net asset value.

Providing Bitcoin exposure through GBTC has been an incredible milestone, Sonnenshein noted. “But moving to an ETF structure will provide investors with the additional protection they are seeking,” he added.

In June 2022, Grayscale challenged the United States Securities and Exchange Commission’s decision to deny its 2021 GBTC conversion application. Sonnenshein expressed optimism about the lawsuit’s potential outcome, stating, “If we’re successful in that challenge, billions of dollars of investor capital could be unlocked.”

Bitcoin’s price surged more than 20% in the wake of BlackRock’s June 15th spot Bitcoin ETF filing, hitting a yearly peak of R591,324.8 (equivalent of $31,460) on July 6th. It is currently trading at R575,693.14 (equivalent of $30,633). As these developments play out, investors and cryptocurrency enthusiasts in South Africa and globally will undoubtedly be watching closely.

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