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Grayscale CEO Michael Sonnenshein Optimistic About Future of Spot Bitcoin ETF

Sead Fadilpašić

Last updated: November 2, 2023 09:25 EDT | 2 min read

Michael Sonnenshein. Source: a video screenshot, Bloomberg

It is a matter of when, not if, a spot Bitcoin (BTC) exchange-traded fund (ETF) is created, argued Grayscale Investments CEO, Michael Sonnenshein.

In a recent Bloomberg interview, Sonnenshein commented on an opportunity that BlackRock might get the first Bitcoin ETF.

BlackRock filed for elusive spot bitcoin ETF in mid-June, despite Securities and Exchange Commission (SEC) being reluctant to allow the launch of such a product in the US.

The regulator has been denying applications left and right, claiming that spot bitcoin is not safe for retail investors, although funds based on bitcoin futures are allowed.

But BlackRock is different – its political power is substantial, many have argued.

Sonnenshein suggested that Grayscale would be unbothered by BlackRock’s ETF, saying:

Today we have a market of multiple bitcoin futures-based ETFs. […] At Grayscale, we’ve long been prepared for a marketplace of multiple spot bitcoin ETFs.

Favorable Outcome Expected

Grayscale is focused on converting the Grayscale Bitcoin Trust (GBTC) into an ETF and getting an opinion from the Washington DC Circuit Court “by the fall at the latest,” Sonnenshein said.

The company filed a lawsuit after the SEC rejected the conversion in June 2022, with a final decision expected later this year.

The CEO stated that,

I think ourselves, and certainly all of our investors included, are optimistic and hoping for a very favorable outcome from the court, in which case we would work immediately in a very proactive manner with the SEC to ensure that GBTC uplists to the New York Stock Exchange as an ETF.

In regards to surveillance sharing agreements, which are becoming more popular, Sonnenshein commented that “this is something that’s actively in discussion.”

[The SEC] want to be able to surveil the underlying Bitcoin market. So it remains to be seen as to whether or not these types of constructs will satisfy that SEC mandate.

An ETF Will Be Approved

Asked what sort of odds would he put on an ETF approval this year, Sonnenshein said that it’s only a matter of when, not if.

When I really zoom out and look at how much progress has been made […] I do think we are at a pivotal moment.

While not directly replying whether the first approval would gain “the most land,” Sonnenshein noted that GBTC is the world’s largest bitcoin fund with some $20 billion and over 3% of the outstanding bitcoin supply.

Investors trust ETFs and there is “certainly” an appetite: financial advisers, retail, and other companies are thinking about bringing their products to market because they see “there’s just that much pent-up demand for access to bitcoin in the form of an ETF,” he concluded.