Many crypto observers keenly awaited how GBTC’s discount would react to the news about BlackRock, the world’s largest ETF issuer and a mainstay in the traditional finance world, attempting to register a spot BTC ETF with the U.S. Securities and Exchange Commission (SEC). Multiple investment managers, including WisdomTree, VanEck, Ark Investment Management with 21Shares, have tried to register such a product over the past two years, but the U.S. Securities and Exchange Commission (SEC) has rejected all applications, so far.
Grayscale – a subsidiary of Digital Currency Group, CoinDesk's parent company – is currently in a legal standoff with the SEC, after the firm appealed the agency’s decision to deny converting its closed-end GBTC fund into an ETF. The so-called “GBTC discount” developed because the fund doesn’t allow redemptions, so investors can only sell their shares on secondary markets.
While crypto markets rallied in the past years, GBTC shares traded at a significant premium to net asset value. Notably, crypto hedge fund Three Arrows Capital made outsized bets to harvest the premium, then spectacularly blew up when the fund’s shares turned into a discount as crypto prices cratered last year.
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