Grayscale Bitcoin Trust’s Premium Falls To 28% As Tug-Of-War With SEC Continues

The Grayscale Bitcoin Trust (GBTC) has been on an uncertain journey over the last year as crypto headwinds have fluctuated. This was a result of the uncertainty triggered by the Genesis Trading bankruptcy, a company under the same Digital Currency Group (DCG) umbrella, of which the GBTC is a part. However, the trust has done better as the market has moved on from this event and the discount is starting to shrink.

Grayscale Bitcoin Trust Discount Down To 28%

The crypto winter of 2022 saw the Grayscale Bitcoin Trust discount to NAV widen over a matter of months. At a point, the discount had shifted to almost 50%, meaning that at its highest premium, investors in the trust were holding BTC at a 50% price lower than the spot market price of the digital asset.

However, with BTC’s recovery over 2023 so far, recovering almost 100% from its 2022 lows, the GBTC has also been on a recovery curve. As of the time of writing, the discount has been slashed in almost half in the space of six months. According to data from YCharts, the Grayscale Bitcoin Trust discount is now sitting at 28.24% as of Monday, July 10.

The performance of the GBTC over the years has prompted Grayscale to propose turning the trust into a Spot Bitcoin ETF. But despite the company presenting arguments to support this move, the United States Securities and Exchange Commission (SEC) has remained vehemently against this idea.

Grayscale has so far filed to turn the GBTC into a Spot Bitcoin ETF two times and the regulator has rejected the filing twice. The second time, Grayscale sued the regulator after being rejected again in June 2022, and the company has not looked back since.

Bitcoin (BTC) price chart from TradingView.com (Grayscale)

BTC price trending at $30,631 | Source: BTCUSD on TradingView.com

Another Bold Move Against The SEC

With the June 2022 lawsuit still ongoing, Grayscale has taken another bold step and has filed a letter in the DC Circuit calling out the SEC. This time around, the digital currency asset manager is contesting the regulator’s decision to approve Leveraged Bitcoin ETFs but not Spot Bitcoin ETFs.

Grayscale highlights in its July 10 filing that although these leveraged ETFs are riskier compared to Spot ETFs, the SEC has granted approval to them while rejecting the latter. In the letter, Lead Counsel, Donald B. Verrilli Jr. highlighted that the Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) that was approved by the SEC in June “exposes investors to an even riskier investment product than traditional bitcoin futures exchange-traded products (ETPs).”

The counsel referred to the SEC’s rejections of Spot BTC ETFs as ‘discriminatory’. However, Verrilli suggests that the regulator could fix this by allowing “proposed spot Bitcoin ETPs like Grayscale’s to begin trading.”

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