ETF Exchange Traded Fund
Coinbase Urges SEC to Approve Grayscale Bitcoin Belief’s (GBTC) Conversion to An ETF
Coinbase sent a letter to SEC arguing that treating role Bitcoin ETPs in a different way from futures-primarily based mostly ETPs can “undermine self belief” in the company.
Cryptocurrency alternate Coinbase sent a letter to the US Securities and Exchange Rate (SEC) to approve the conversion of Grayscale’s Bitcoin Belief (GBTC) into every other-traded fund (ETF).
In its letter, Coinbase mentioned that GBTC is already a tried and tested system for retail patrons to reach publicity to Bitcoin at prices carefully reflecting role BTC value with out maintaining the crypto asset themselves.
GBTC shares are held in bigger than 600,000 retail and institutional brokerage accounts in all 50 states, it famed, adding that in 2019, GBTC became as soon as the 5th finest maintaining in millennial retirement accounts, old to Microsoft, Disney, and Berkshire Hathaway.
But in its most modern structure, GBTC shares are possible to be not eligible for redemptions which leads them to alternate at premiums or reductions. And this effort shall be solved by approving Arca’s proposal, it mentioned.
— Paul Grewal (@iampaulgrewal) December 15, 2021
In its statement in make stronger of Arca’s proposal, Coinbase mentioned the proposal moreover addresses SEC’s concerns of fraud and manipulation because it depends on Bitcoin’s underlying value in the role markets.
Because a futures-primarily based mostly ETP and role Bitcoin ETP both are reliant on Bitcoin’s role value, “we predict about ETPs that invest in Bitcoin futures contracts most modern a substantially identical danger of manipulation as a job Bitcoin ETP,” mentioned Coinbase, which has 73 million verified customers.
In October, SEC current the first futures-backed Bitcoin ETF on the grounds that it provides increased investor protection whereas it has but to approve a single ETF in the final eight years since the first utility became as soon as filed.
In line with Arca’s proposal, whereas Bitcoin itself isn’t inherently resistant to fraud and manipulation, the Index represents an effective technique to forestall such practices.
Important admire Grayscale itself, Coinbase argues that role Bitcoin ETPs shouldn’t be treated in a different way than futures-primarily based mostly ETPs, and a rejection of Arca’s proposal can be “in declare battle” with that.
“The Rate’s resistance to developing this sort of conclusion with appreciate to a job ETP doesn’t appear warranted by public hobby and investor protection protection concerns.”
And if the SEC applies varied requirements for the merchandise, this sort of treatment would possibly per chance “undermine self belief” in the company as a just administrator, which can per chance further stifle innovation. Coinbase mentioned,
“Market participants must soundless not be left guessing about what criteria the Rate will employ when reviewing a selected product, nor must soundless market participants be left on the hours of darkness time with appreciate to what proof is known to web and most modern to the Rate when in search of approval for a original product. This lack of consistency appears to us, unfair and is with out protection justification.”