Grayscale’s Crypto ETFs: The Future of Bitcoin Investment

Cryptocurrency asset manager Grayscale Investments is going all-in on its financial products as it takes a hard stance against the United States Securities and Exchange Commission (SEC). On 9th May 2021, Grayscale announced the launch of the Grayscale Funds Trust, a Delaware statutory trust entity that would manage the company’s publicly traded financial products such as three new crypto-focused exchange-traded funds (ETFs).

These new funds aim to give investors access to the potential future value of Bitcoin by way of shares that track BTC’s price. Furthermore, the Global Bitcoin Composite ETF would invest in exchange-traded products backed by Bitcoin (BTC), including Bitcoin mining firms.

Grayscale’s Fight for Bitcoin ETFs

However, Grayscale isn’t content with the SEC’s regulations, arguing in a 73-page brief that the regulatory body has discriminated against its request to convert their existing $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product. Grayscale’s suit states that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market, and that past ETF approvals mean exemption to actually launch the product should be considered.

This legal tussle with the SEC is ongoing, and until the registration statement relating to Grayscale Funds Trust is approved by the SEC, none of the three ETFs will be available for public purchase.

Crypto Industry Thrives Despite Warnings: $3.4 Billion Bitcoin Recovery

It’s not just Grayscale asking for the SEC’s approval, however. Recently, the local CSOP Asset Management in Hong Kong launched the first crypto-based ETFs that invest in Bitcoin and Ethereum futures listed on the CME exchange. These ETFs are currently the only ones allowed by Hong Kong’s Securities and Futures Commission (SFC). While the SFC is open to cryptocurrency ventures, it has also warned users of virtual asset platforms, urging for stricter regulation of the new technology.

But it’s not all bad news out there in the crypto industry! In the spring of 2021, $3.4 billion worth of Bitcoin was kept in a popcorn tin and recovered by the FBI. The digital assets were part of the now-defunct Silk Road marketplace, an online black market.

The FBI’s $214 Million Bitcoin Hunt

The story goes back to 2013, when the FBI took down the website and arrested its operator, Ross Ulbricht. Despite Olbricht’s life sentence, the Silk Road earned a gross revenue of $214 million and had 900,000 registered users at its peak. Among them were big players such as Mark Karpeles, CEO of Mt. Gox and Charlie Shrem, the founder of large Bitcoin exchanges BitInstant.

The Silk Road funds, mainly in Bitcoin and Monero, were tracked by investigators, but the FBI failed to recover the secret stash of 144,336 BTC. Then in May 2021, a Connecticut-based man named Inigo De-Oliveira, one of the former owners of the website BitFloor, turned self-incriminating after being arrested by the FBI. He disclosed information about the whereabouts of the Bitcoin and the FBI was able to seize and deny the funds.

Securely Managing Crypto Funds: A Necessary Step for Investors

This mid-May incident proved to investors that even large sums of money in cryptocurrency could be victimized and misappropriated if not properly and securely managed. The Grayscale Funds Trust, therefore, is taking a much-needed and welcome step forward with the protection of its investors’ digital assets. Despite the fact that the second-generation derivatives, cryptocurrency ETFs, are embroiled in a regulatory tug-of-war, they do offer a safe and legitimate way of investing in crypto. This could also be an avenue to clear the murky and unsustainable investment environment that has developed over past years as the crypto industry slowly gained traction.

But before investing, it is important to review the trajectory of each digital asset. As the SEC’s caution echoes, investments in Bitcoin and other crypto can be risky compared to other commercial products. In particular, the spot market for cryptocurrencies often tends to be volatile, unregulated and susceptible to fraud and market manipulation. Hence, any knowledge of crypto assets alone is not enough to gain the highest possible return on investments. Security is the utmost priority and investors should look for any signs of fraud, lack of transparency and even excessive exposure to leverage.

Exploring Crypto Investment Opportunities: Short-Term vs. Long-Term Rewards

Investors should also be mindful of their own individual goals when researching the various crypto-related products. For those looking for short-term rewards and capitalizing on the quick turns of the markets, cryptocurrencies are a good option. For those in search of a more tempered investment, products like the Grayscale Funds Trust provide a way to capitalize on the potential of BTC while mitigating the risk. Nevertheless, cryptocurrency ETFs have the potential to open up a wide range of investment opportunities, allowing the investors to take an active role in the digital asset space.

Crypto ETFs: Diversifying Portfolios, Seizing Opportunities, Maximizing Returns

Although there is no definitive answer as to which one will be the winner in the imminent regulatory race between the SEC and Grayscale Investments, it is indisputable that cryptocurrency ETFs offer many options for investors. These products help to diversify a portfolio and open up new investment opportunities, while continuing to strive for security and legitimacy.

The outlook of the crypto industry still remains ambiguous and one has to be careful while investing in crypto. However, with the emergence of new technology, the crypto asset space could be on the brink of a new era of growth and success. With the right information and sound financial advice, one will be able to make informed decisions, seize opportunities, and maximize returns in the crypto asset space.

Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

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Rina Giannino
Journalist venturing into blockchain, Rina has been a follower of the technology since 2019 and finally taken the plunge with a career as a journalist in the industry.