GRAYSCALE AND WALL STREET BITCOIN ETF

[Hold-n-play]

https://www.bloomberg.com/news/articles/2022-06-27/grayscale-bitcoin-trust-lines-up-jane-street-virtu-in-etf-bid

Grayscale announced a deal Monday with Wall Street trading firms Jane Street and Virtu Financial (VIRT) to close the discount on its Bitcoin Trust (GBTC-USD) following potential ETF conversion. Since Grayscale submitted its application for ETF conversion in October 2021, the SEC has delayed approval three times.

Now, as part of the regulatory process, the regulator can no longer delay the application and must make a final decision on July 6.

In my opinion, this is not going to happen and SEC will likely reject it. 

However, here is an interesting twist in this story. The firm’s global head of ETFs, David LaValle stated that if the SEC doesn’t approve GBTC’s conversion, the firm is prepared to appeal the decision by suing the regulator.

I realize that any lawsuit is usually a long-term process but this might be a light at the end of tunnel... Given the potential importance of ETF for BTC in terms of mass adoption, I look forward to seeing updates concerning this situation. 

Thanks for reading my post.

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[bitmover]

I realize that any lawsuit is usually a long-term process but this might be a light at the end of tunnel... Given the potential importance of ETF for BTC in terms of mass adoption, I look forward to seeing updates concerning this situation. 

Etf is not important for mass adoption .

Etf is just a good financial instrument to be exposed to bitcoin price without actually owing it.

Mass adoption is totally different. It is more related to people actually owing bitcoin and buying stuff with it. Or even holding actual bitcoins.

Additionally,  Grayscale is particularly interested in it because an etf would help them control share quantity and the price spread. Geayscale trust is being traded now for 30% discount and an etf might help change that discount.

[Hold-n-play]

I realize that any lawsuit is usually a long-term process but this might be a light at the end of tunnel... Given the potential importance of ETF for BTC in terms of mass adoption, I look forward to seeing updates concerning this situation.  

Etf is not important for mass adoption .

Etf is just a good financial instrument to be exposed to bitcoin price without actually owing it.

Mass adoption is totally different. It is more related to people actually owing bitcoin and buying stuff with it. Or even holding actual bitcoins.

Additionally,  Grayscale is particularly interested in it because an etf would help them control share quantity and the price spread. Geayscale trust is being traded now for 30% discount and an etf might help change that discount.

There are published sources that believe in the opposite, BTC ETF is important for mass adoption. Here is a couple of links:

https://cointelegraph.com/news/point-of-no-return-crypto-investment-products-could-be-key-to-mass-adoption

https://capital.com/does-the-bitcoin-market-need-a-spot-etf-for-mass-adoption

This is why I said "the potential importance" because I am aware that some strategies like increasing awareness / education regarding BTC and blockchain overall would do better job in terms of mass adoption compared to ETF.  

[darkv0rt3x]

I think we should start listening/watching some more stuff about what is going on in our countries, in terms of economics, schemes to make riche people richer and poor people poorer.
We should definitely listen/watch stuff like the following videos I suggest:

The great reset
https://www.youtube.com/watch?v=MOm_QmnRBSs

It explains a few basic concepts of economics of countries like inflation, cycles, people's savings, banks, etc. A must watch


Another one is this:
How The System Keeps YOU POOR! (Money Myths That Keep You Broke) | Jaspreet Singh on Impact Theory
https://www.youtube.com/watch?v=42k9vH3OXI0

[franky1]

Etf is not important for mass adoption .

Etf is just a good financial instrument to be exposed to bitcoin price without actually owing it.

There are published sources that believe in the opposite, BTC ETF is important for mass adoption.

to add some detail
people only scream mass adoption because they want coins price to go up helped by people having coins.. to raise the price up..

here is the thing..

imagine an ETF offers 1 share per 0.001 BTC. where by thats a share per $20

now imagine there are 1 million employees putting just~$5k a year min into a retirement package
thats 250 shares each so 250million shares. or 250k btc lump to cover the 250m shares.
(im using small numbers of $5k and 1mil as there is a diverse range of other retirement investments that can be added. to the billions of employees retirement portfolios)

that portfolio manager has adopted 250k btc. for 1mill customers

yes the employees are not personally holding BTC to spend daily today.. and yes its locked in a custodial "trust". but the effects on the price are noteworthy even with just 1million employees in the world having their partial retirement portfolio in btc collateralized shares

ofcourse there is not enough supply to do that arrangement 40x for 40 years of employment..

so the price needs to go up for each 250k coins bought and locked per year to cover that year of retirement investment..
and this 250k bitcoin .. is as already said, is only talking about just 1million people investing $5k in bitcoin for retirement each year.

[Hold-n-play]

Etf is not important for mass adoption .

Etf is just a good financial instrument to be exposed to bitcoin price without actually owing it.

There are published sources that believe in the opposite, BTC ETF is important for mass adoption.

to add some detail
people only scream mass adoption because they want coins price to go up helped by people having coins.. to raise the price up..

here is the thing..

imagine an ETF offers 1 share per 0.001 BTC. where by thats a share per $20

now imagine there are 1 million employees putting just~$5k a year min into a retirement package
thats 250 shares each so 250million shares. or 250k btc lump to cover the 250m shares.
(im using small numbers of $5k and 1mil as there is a diverse range of other retirement investments that can be added. to the billions of employees retirement portfolios)

that portfolio manager has adopted 250k btc. for 1mill customers

yes the employees are not personally holding BTC to spend daily today.. and yes its locked in a custodial "trust". but the effects on the price are noteworthy even with just 1million employees in the world having their partial retirement portfolio in btc collateralized shares

ofcourse there is not enough supply to do that arrangement 40x for 40 years of employment..

so the price needs to go up for each 250k coins bought and locked per year to cover that year of retirement investment..
and this 250k bitcoin .. is as already said, is only talking about just 1million people investing $5k in bitcoin for retirement each year.

You made a great point.

Maybe the hidden point of "ETF and mass adoption" is that some people would be interested to buy actual BTC once these "old school" investors would get more comfortable with the whole idea of BTC and blockchain overall. Eventually.   

[franky1]

when i see people scream mass adoption..
i am not seeing them say "i want to contact my retail store in my town to get them onboard, so that people can buy things with it via that retailer".. anymore
these days mass adoption is "tell your friends to buy/invest in bitcoin and hold"

(i personally preferred the good old days when people actually wanted merchant adoption followed by crowd adoption so that the crowd had somewhere to spend it.. but now its just "invest and hold")

[Hold-n-play]

Yes, but some people are way to conservative to invest into BTC especially they heard a lot of FUD. Unfortunately.

One thing for sure that mass adoption is not an "overnight" thing. It does take some time.

[darkangel11]

In my opinion, this is not going to happen and SEC will likely reject it. 

Because the SEC is corrupt and they don't want bitcoin to rally because that could make investor see it as a safe haven to escape from falling stocks. They want people to get absolutely wasted on the stock market, tuck tales between their legs and keep money in the bank gain or buy bonds.

However, here is an interesting twist in this story. The firm’s global head of ETFs, David LaValle stated that if the SEC doesn’t approve GBTC’s conversion, the firm is prepared to appeal the decision by suing the regulator.

They should do it because the regulators are doing what they can to delay everything. They knew they were going to reject it in 2021 but they had the ability to delay this so they did because rejection means they have to give guidelines and explain their decision. A delay means they don't have to do anything and it will take more time before another application can be filed.

They can't keep rejecting it forever because they approved a scam futures ETF and a spot ETF follows the same rules so the reason they are rejecting it is not because they want to protect investors or don't trust grayscale. The SEC is owned by the central bank and the central bank hates anonymous and decentralized forms of payment.

[franky1]

i think darkangel needs to put them special smelling salts away. (he may be smelling paranoia)

the SEC dont really care. what they actually want is just so that no small enterprise of unknown history gets "first mover advantage". yes they prefer one of their own elite institutional banks to be the first-in, in the crypto ETF industry where by its then easier to set, meet and regulate it and then use it as a template for the subsequent businesses that apply using the first mover as template

[jackg]

It might be too soon for an etf to be approved by the sec, but I think doing it during a lull is probably the best time to do it for both crypto and the investors that might find it - there was a lot of people back when these things were first being discussed saying futures are normally offered at the bottom and etfs at the top (which may desuade investors).

[bittraffic]

when i see people scream mass adoption..
i am not seeing them say "i want to contact my retail store in my town to get them onboard, so that people can buy things with it via that retailer".. anymore
these days mass adoption is "tell your friends to buy/invest in bitcoin and hold"

(i personally preferred the good old days when people actually wanted merchant adoption followed by crowd adoption so that the crowd had somewhere to spend it.. but now its just "invest and hold")

Its not focused on the number of people who holds and use the thru the exchange. Ofc its not adoption but its the start when they decide to send the coins into their mobile wallets. The real adoption is when there are real merchants accepting BTC on their own stores. Unfortunately, store owners are encourage only to accept BTC when they see the government also adopts BTC.

Would they have the chance to win if they sue the regulator? Sounds like more trouble ahead.
But didn't Gary Gensler already said BTC is a commodity? That see a green light to me for BTC to be approved ETF.

[Lucius]

The real adoption is when there are real merchants accepting BTC on their own stores. Unfortunately, store owners are encourage only to accept BTC when they see the government also adopts BTC.

When you write it like that then it seems like something that makes sense, but in reality things are completely different. The average user does not want to pay with BTC, and even if at some point they want to do so, they will have problems with their transaction because they do not understand what the fee is and how to set it correctly, what is RBF or what is a mempool... If we were talking about transactions in physical stores, then the problem is even bigger because sometimes the time from payment to the first confirmation can be up to 60 minutes - the solution is to make the transaction without the RBF option, but who will educate people on this issue?

Would they have the chance to win if they sue the regulator? Sounds like more trouble ahead.
But didn't Gary Gensler already said BTC is a commodity? That see a green light to me for BTC to be approved ETF.

I think that with a lawsuit they would just touch the nest of hornets because people in the SEC are not of those who experience such things lightly. Grayscale should have more patience and not act like a spoiled child who threatens to do this or that if he doesn’t get what he wants.

In addition, we should be very careful with what we want, because although most believe that the spot BTC ETF will affect the price in a positive way, it could create big problems for us in the long run.

One interesting reflection worth reading :

theymos
4 yr. ago

Agreed, an ETF will almost certainly turn into a disaster at some point. The coins will be stolen, forks will be handled controversially, there will be issues with fungibility (eg. someone will "trace stolen coins" to the ETF's stash), the world will freak out when a bunch of retirees lose their life savings after doing the equivalent of buying BTC at $20k, etc. etc. It'll also get the sort of people who love regulation more into BTC, which is never good.

But investors want it, so it'll probably happen eventually. In particular, I totally condemn trying to get regulators to interfere in the free market more than they already do by blocking any ETF. (When the SEC was last looking into this, I had actually written a long document that I was going to send to them in order to comment on many technical issues with their proposed Bitcoin ETF regulation, but I decided not to send it because I don't want to have even the slightest hand in regulations.)

An ETF probably will increase the price a lot (until the ETF suffers its near-inevitable catastrophe), which has some pros and cons.

Note that an ETF can't affect Bitcoin itself, just the ETF investors and the market. There is no voting of any sort in Bitcoin, so it's not as if holding a lot of BTC gives you any power over Bitcoin, for example. I do agree with Andreas that the creation of a "corpo-Bitcoin" seems probable, perhaps after the ETF loses a ton of BTC and wants to undo it.

[bitmover]

Etf is not important for mass adoption .

Etf is just a good financial instrument to be exposed to bitcoin price without actually owing it.

There are published sources that believe in the opposite, BTC ETF is important for mass adoption.

to add some detail
people only scream mass adoption because they want coins price to go up helped by people having coins.. to raise the price up..

here is the thing..

imagine an ETF offers 1 share per 0.001 BTC. where by thats a share per $20

now imagine there are 1 million employees putting just~$5k a year min into a retirement package
thats 250 shares each so 250million shares. or 250k btc lump to cover the 250m shares.
(im using small numbers of $5k and 1mil as there is a diverse range of other retirement investments that can be added. to the billions of employees retirement portfolios)

That is not what I would call mass adoption, but institutional money flowing to crypto.
Those workers are not really buying btc, they are just exposed to a retirement plan that decide to buy some btc(maybe that don't even have a choice to be exposed to btc or not)

But, certainly that is an important instrument for bitcoin in this financial world.

I just think that people are too much worried about btc price and how would it go up. Price spikes do not mean mass adoption.

[franky1]

That is not what I would canal mass adoption, but institutional money flowing to crypto.
Those workers are not really buying btc, they are just exposed to a retirement plan that decide to buy some by  (maybe that don't even have a choice to be exposed to btc or not)

But, certainly that is an important instrument for bitcoin in this financial world.

I just think that people are too much worried about btc price and how would it go up. Price spikes do not mean mass adoption.

exactly its not true adoption.. its just coin "lockup" to cause the amount of coins going to an exchange to sell to dry up for a "demand" price rise.. and that in most cases is as you say the only reason many scream "adoption" but actualy want more buyers(demand/institutional money flowing) for a price rise.. they are not interested in users utility. they just want the price demand/rise.

and as you say. yes a large allotment of coins will cause a price spike that is temporary. but the tool is that those coins are then locked away and untouched for upto 40 years meaning again. demand price rise. due to lack of coins to sell.

heck there is even the "adoption" scheme of locking up bitcoin to then use other networks("altnets","subchains", "sidechains" "offchains") they are all the same game. locking up real coins long term so that it causes an exchange demand due to lack of coins being sold. .. its kind of hilarious when they call all these schemes "adoption".. they keep missing the point. when locking up real btc. and then go playing around on other networks/systems with tokens/shares, etc .. thats not bitcoin adoptions. thats other system adoption.. yes it impacts the price of bitcoin. but not "adoption"

Its not focused on the number of people who holds and use the thru the exchange. Ofc its not adoption but its the start when they decide to send the coins into their mobile wallets. The real adoption is when there are real merchants accepting BTC on their own stores. Unfortunately, store owners are encourage only to accept BTC when they see the government also adopts BTC.

Would they have the chance to win if they sue the regulator? Sounds like more trouble ahead.
But didn't Gary Gensler already said BTC is a commodity? That see a green light to me for BTC to be approved ETF.

the latest "adoption" game is not to have merchants adopt bitcoin. nor have people escape custodial exchanges to put bitcoin into their own independant wallet..

but now its instead to lock up bitcoin with a co-partner(stranger requiring their authorisation) for a few months and then go play with other units of account on another network and get merchants to adopt that other network instead. whereby they want to call that bitcoin2.0
(this is the "bitcoin layer 2" and "bitcoin LN" brand stealing and user stealing of the other network pretending it is "bitcoin")
...

as for suing the regulators.
i understand new financial tools require new regulations to fit its purpose.

many new regulations are made, and each one comes with a process of calculating the "cost to business" effect of a regulation, where it has to minimise this cost/burden because yes businesses can sue the regulator if its an overburden. and most new regulations are made in like 120days. so it leaves regulators in a bad defence position to delay things for years for no reason.

for this situation specifically.. it depends on the details
if an application has a normal deadline. its normally only allowed to be postponed/extended if there is an error found on the application that needs to be corrected or that the application does not meet an acceptable threshold to be accepted. whereby more time is given to tweak the application and update it. or its just rejected and they have to apply again..

its not about suing them for not auto accepting an application and awarding it an ETF. its about not even giving reason about why its not even being processed!! even if that processing leads to an objection/rejection

just leaving a company in limbo not explaining why they cant accept or reject it. costs businesses money. where the business cant do anything or help move the process along with updated edits. or change the business policies to fit the regulator needs.. simply a "come back next year" is not something that is free for the business.. and regulators should not put undue costs on a business due to regulator decisions. because as first said they can be sued

so the regulator needs a good excuse as to why:
they didnt simply reject it by saying what is wrong with the application.
they didnt offer suggestive changes/hints/options to update the application
they didnt request business policy changes to fit the regulator needs
.. because if they just delayed it for the sake of delay.. that is no defense(even during covid)

[bitmover]

and as you say. yes a large allotment of coins will cause a price spike that is temporary. but the tool is that those coins are then locked away and untouched for upto 40 years meaning again. demand price rise. due to lack of coins to sell.

I don't believe this is true. If a pension fund decide to buy 1mi usd of a Bitcoin etf, that  doesn't mean they will hold that etf shares for 40 years.

The fund may decide just to sell those etf shares in the next month.

You may argue here: "but the ETF share will just change hands"
Indeed. However, the ETF administration may decide that the volume is too low and they may decide , at any time, to buy and burn some shares and dump those btc back to exchanges at any time.

There is no lock up when we talk about bitcoin etf.

The same applies for gold etf or any other etf.
Look at IAU (largest gold etf) market cap over time. They clearly bought and sold gold over time
https://www.macrotrends.net/stocks/charts/IAU/ishares-gold-trust/market-cap

[franky1]

and as you say. yes a large allotment of coins will cause a price spike that is temporary. but the tool is that those coins are then locked away and untouched for upto 40 years meaning again. demand price rise. due to lack of coins to sell.

I don't believe this is true. If a pension fund decide to buy 1mi usd of a Bitcoin etf, that  doesn't mean they will hold that etf shares for 40 years.

The fund may decide just to sell those etf shares in the next month.

You may argue here: "but the ETF share will just change hands"
Indeed. However, the ETF administration may decide that the volume is too low and they may decide , at any time, to buy and burn some shares and dump those btc back to exchanges at any time.

There is no lock up when we talk about bitcoin etf.

The same applies for gold etf or any other etf.
Look at IAU (largest gold etf) market cap over time. They clearly bought and sold gold over time
https://www.macrotrends.net/stocks/charts/IAU/ishares-gold-trust/market-cap

never look at a market cap

its NOT how much reserve is held(that changes) thats then divided down to discover a market price

its actually the opposite its the market order of how much is spent to buy just a few shares. multiplied by total shares.
the factor you see moving on the chart is not the amount of shares total changing rapidly. its the per share price that is causing the movement.

imagine it this way.. if the share price was fixed. you would see a straight line on the market cap.

like in bitcoin.. we are pretty much at 19m circulation for a long time. not much growth monthly in comparison. yet the market cap shifts alot in the last month. not because lots of coin was created or destroyed. but because the per coin price manipulated the market cap.

..
that said yes some portfolio managers might drop one share asset backed share and pick up another. but long term the trust holding the collateral of bitcoin offering shares to the portfolio market is not going to play to the whims of the short term markets.

most of the time it is a thing of selling shares from one portfolio manager to another where the trust does not need to "buy back" allotments of shares.
its like most businesses they are more likely to dilute the shares by making more by having more collateral. rather than having to compulsory buy-back shares

also they wont over leverage themselves by locking up too many coin. because that just dilutes their shares before they even begin...
my example was not about them buying up 1mill of coins when an ETF application gets certified to operate. i said 250k as thats an easy number to lock. like i said its only 1mill people out of 8 billion not even (0.02% of the market)
so safe numbers to assume are long hoards.

[bitmover]

never look at a market cap

its NOT how much reserve is held(that changes) thats then divided down to discover a market price

its actually the opposite its the market order of how much is spent to buy just a few shares. multiplied by total shares.
the factor you see moving on the chart is not the amount of shares total changing rapidly. its the per share price that is causing the movement.

No, this is not happening here.
The iau price since 2008 had only about 300% change, but the marketcap about 15x (from 2 to 30bi).

You should look at marketcap when you want to know price X shares, which is what we are talking about here.

Etf Shares can be burnt at any time. This proves that bitocins or gold are not locked when a new etf shows up.

Manager can just sell the bitcoin and burn shares  , dropping the marketcap. There are no locked btc.

[franky1]

taking coins out of a lock. drops a etf market cap. but..
 then they have less coins meaning it increases the price.. same is true for the opposite.

same goes for any share based company market. adding more shares dilutes the price and removing shares consolidates the price. as thats the point of doing it in most cases.

dont look at market cap to calculate how many shares/coins there are.. instead actually look for the stat behind it that actually shows how many shares/coins there are.

take that market cap link you shown. just that chart nothing else. just that wiggly line chart. can you tell me without using any other information you found elsewhere. can you tell me how many assets are actually held.
nope you cant. and thats the point. you need further calculation of another stat to subtract the market price to get to the actual asset held. or you need the asset held stat to verify the market cap calculation. but that chart alone is not meaningful.

take the bitcoin network
the market cap is not a measure of the coins in circulation alone. its a current price X coins in circulation..
if you want to know how many coins in circulation get the source data. yep i mean the actual coins in circulation stat.

.. but in general.. speaking about market caps in crypto. they are meaningless

i can make an altcoin today. with 1trill coins premined. and selling just one.. yep just one for just $1.. it instantly creates a $1trillion market cap.
but that market cap does not represent that there is $1trill stored somewhere holding my altcoin up.
its a meaningless stat.

..

im looking at greyscales page whilst posting this.. for example. im not looking at the price or the market cap. nor am i looking at the shares issued or the shares/btc stat.. heck i am not even looking at the AUM$ (assets under management in dollars)
instead.. i am looking for the assets under managed before its then valued in dollar. yep im actually looking for the coin hoarded amount. i am not interested in reports and stats after things get adjusted/tweaked misrepresented, blown up or soften down by market numbers of other variables

[DeathAngel]

There will be a bitcoin spot etf approval this decade but that’s all I can confidently commit to. The SEC seem determined to keep rejecting every application so why is this one any different. I think possibly big banks & or government are filling their bags & or suppressing the price with every ounce of their being. The economy is screwed at the moment, the last thing the government wants is the little people controlling their own money & flowing out of the failing USD.