Grayscale on the 'Holy Grail of Bitcoin ETFs’: Spot Bitcoin ETF

The first U.S.-listed exchange-traded fund providing exposure to bitcoin became the fastest ETF to date to reach $1 billion in assets, but things have been relatively quiet for the ProShares Bitcoin Strategy ETF (BITO) since it achieved that record. 

Assets for the fund currently stand at around $846 million, a far cry from the multibillion-dollar potential that a lot of people saw—and still see—for the bitcoin ETF category.  

One big thing could be holding BITO back: It’s a bitcoin futures ETF, not a spot bitcoin ETF. 

For 10 years, investors pined for a bitcoin ETF, but when they finally got it, it wasn’t exactly what they were looking for. 

The holy grail of bitcoin ETFs is a spot bitcoin ETF, one that offers more direct exposure to the cryptocurrency.  

The bitcoin futures ETF “was a really, really momentous win for the marketplace and a great step in the right direction,” David LaValle, global head of ETFs for Grayscale, recently told etf.com. 

But in instances when a commodity can be reliably stored—as is the case with precious metals like gold—“the marketplace overwhelmingly prefers a spot-based ETP,” he said.

That spot ETF is what Grayscale is committed to seeing come to market. 

Grayscale is the firm behind the $15 billion Grayscale Bitcoin Trust (GBTC), the largest bitcoin fund in the world. It’s been trying to convert GBTC—which currently acts more like a closed-end fund—into a spot bitcoin ETF. 

Disappointing Outcome

But the SEC hasn’t played ball. In 2022, the regulator blocked Grayscale’s attempts to make the conversion, a disappointing outcome considering that it had allowed the first bitcoin futures ETF to trade in the U.S. several months earlier. 

Grayscale believes that the SEC acted inconsistently and unfairly by approving a bitcoin futures ETF but not a spot bitcoin ETF. As a result, the firm sued the SEC late last year.  

That lawsuit is still ongoing and we’re expecting big news on that front in the coming months. 

We’re pleased to be speaking to Grayscale’s David LaValle on March 14 about all the latest developments in the lawsuit as well as other topics related to the history of development of bitcoin ETFs in the U.S. markets. 

This webinar is brought to you by Grayscale.