Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 6. (Read 16372 times)

I find this quite amusing, as the SEC is now telegraphing each move to every ETF applicant right now. Being overzealous toward the ETF sponsors maybe means less cautious when approving, letting the all the bunch of issuers fight to get the bigger share of the market.
SEC is now terrified to be accused of picking a winner (or a loser, fwiw) that is now worried about everyone doing theri homework and having the ETF approved.

grayscale said this


so yep SEC did not have confidence in the old management teams lack of experience in fund management of an ETF

I think that all these events are happening due to the acceleration of approval of the spot BTC-ETF. GBTC also has an application with the SEC, and perhaps during the negotiations some people had to leave the company to speed up the process. But these are just my thoughts.

Coinglass has two live charts for Grayscale holdings and Grayscale Premium

https://www.coinglass.com/pro/gray/Grayscale
https://www.coinglass.com/pro/gray/GrayscalePremium

It seems Coinglass is more regular updated their chart and figures for Grayscale Bitcoin Trust than two following websites.
https://bitcointreasuries.net/
https://buybitcoinworldwide.com/treasuries/

It appears someone is trying to terminate the hustlers and the clowns in the cryptospace before uncle Gary agrees on an approval on a spot ETF for bitcoin. I reckon Justin Sun might be the next person to be terminated. This terminator might be the Lex Luthor of the cryptospace and he is doing this with the help of his backer. The backer might be Larry Fink.

comparing grayscale to blackrock.
grayscale lacks proper ETF experience and fund management experience

Murthys work history is in public relations, communications and litigation
silberts history is in private investments (business internal shares of private companies/venture capital)

they both do not have experience of managing funds of a publicly traded investment vehicle

so even if grayscale never done a ETF before, unlike blackrock..  the only chance to show grayscale can be capable of running one is to have a team that ran one before from other ventures in their work history

grayscale was missing a few key bits of confidence of running the ETF in SEC eyes so this management reshuffle is a positive
some may think silbert is falling on his own sword, resigning from the business he founded.. but im sure he is well compensated and will continue to earn more even if he isnt barking orders any longer from a direct position within grayscale.

also barry silbert is still the DCG president so still gets to puppet master grayscale from a different level, though it would on-paper appear as grayscale distancing itself from the legal troubles of DCG's 2022-23 legal woes

the replacements did work for DCG previous to this month so its not like they're strangers to DCG manifesto/corporate strategy. but they do appear to have better work history that can aid grayscales confidence more then the previous

If I had to guess, it's probably related to some residual fallout from Genesis.  Any ties to either the Genesis bankruptcy or the 'Gemini Earn' thing and the SEC's subsequent intervention probably look bad for the application.

Breaking news:

GRAYSCALE BITCOIN TRUST (BTC): BARRY E. SILBERT AND MARK MURPHY NOTIFIED OF THEIR RESIGNATION FROM BOARD OF GRAYSCALE INVESTMENTS - SEC FILING - RTRS


Still unclear the reason.
Not a good sign for me.

I think blackrock does grab it.

i was about to put together a table of the different exchanges the applicants want to appear on. thanks for saving me time(have my usual merit giveaway)

most share traders/pension managers care more about the nasdaq first then NYSE second.. the cboe are way down the scale
my odds are still on blackrock(ishares) being first mover for nasdaq

as for NYSE
though bitwise and hashdex are a few steps behind. i still dont think SEC trusts grayscale enough so could delay all NYSE candidates. but thats my opinion based on all the DCG drama with the SEC.
grayscale also realised they were not etf experts so recently head-hunted and hired one from investco.. grayscale may now have some expertise to adapt their platform to tick-box a few more sec requirements, only time will tell

Let's just make a small recap.

Firstly, an overview of the current situation: applicants, exchange custodian, the usual stuff:



Secondly, the confirmation there will be a window open between Jan 5th and Jan 10th.



Bloomberg didn't move their estimate from 90% in January, still.

I would tell you:  "Great.  Thanks for being so specific with the results of your 'research.' "



I would say:  "That's wonderful.  I am not sure why it matters in the whole scheme of things and maybe the overall landscape of the forest, which is more of my concerns rather than getting caught up with the weeds and/or the trees."



 I would say: "Great.  Wonderful.  I hope this is going somewhere with a point."


 I would say: "Fair enough."


I doubt that the supposed fleeing of the sinking ship has caused a situation in which the SEC would error on the side of ONLY approving 1 or 2 applicants, as was explained in the earlier interview that I linked in which the guy being interviewed mentioned that the SEC is aware of the error of its way in the way it had approved the GOLD ETF and took a long time before it approved any more than one... so in that regard, I am going to stick with my idea that it will be more than 4 within 2 weeks rather than 4 or less, which still seems to be your position.. . but hey.. I don't care either way, and I hardly even feel like it anything to really get too worked up about, especially since I am not changing any of my own BTC portfolio management behaviors based on whether this happens or not.. and whether you are or not, you would have to make those kinds of representations to the extent that they even matter.  I thought that you said that your overall position is that you don't really trade.. but hey, why should I be studying what Franky1 does with his BTC when I have my own ways of dealing with these kinds of thingies?


 I am not sure if you are saying anything especially original or revealing since most people are already mostly presuming that blackrock is amongst the ones that are approve in the event that any are approved, so probably the only way blackrock would be denied would be if all of them were denied or if maybe one of them was approved a bit prior to Blackrock.. whether that would be more than two weeks prior might be surprising but probably not a total shock if there ended up being some reason to carry out the approvals that way.. maybe to create the appearance of not having favorites or something like that.


So yeah there are non-zero chances of outlier scenarios, but I doubt that it is productive to explore those outlier scenarios instead of trying to consider the more likely scenarios.. even though we know sometimes outlier scenarios sometimes do end up happening.. but still I doubt it is necessary to explore outlier scenarios unless we have some reason to do so, and you already seem to have stated that there is no real reason to consider outlier scenarios, except to acknowledge that they exist.

what if i told you the total is not 13 nor 12 but less..
what if i told you applicants like franklin want to remove themselves from the SEC lineup for nasdaq securities ETF listing.. and instead jump into the CFTC regulatory permit of CME commodity ETF listing
what if i told you franklin is not the only one that wants to do 'in-kind' basket settlement and jump ship over to CFTC regulatory permit


what if i told you my mentioning of blackrock, greyscale, ark21 was not an endorsement of whom is going to get gold silver and bronze of the approval olympic race.  but instead just 3 well known applications where grayscale has most collateral and ark21 has least collateral.. just as a collateral comparison of scenarios of which would recruit agent/brokers or not

as for the 4.. well anything can happen but it sure as hell isnt going to be all 12 at once. nor 10
as for which single might win gold.. my odd are on blackrock

i was looking at genslers personal financial disclosers and blackrock and vanguard are his prefered investment managers. and im sure there has been alot of push to get vanguard to apply.. but vanguard just weeks ago announced no interest.. so im sure that might have given gensler one less excuse to delay things hoping his buddy vanguard might step in.. now they are not. this adds more points towards blackrock.

my reasoning for favouring blackrock is summarised as:
a. blackrock has a long history of running successful ETF and know what they are doing
b. blackrock already got their ticker listed on DTCC meaning traders new software update will have blackrock ready to pick (other applicants are not part of the traders software update)
c. blackrock (not others) were in talks with SEC about how they propose to secure value of share->fiat settlements of dissolving baskets
d. blackrock settled all legal issues and paid all fines to appease the SEC. other applicants stil have some legal issues holding hem back

the others are not yet having these key steps finalised so they still have a few steps to go to catch up with blackrocks progress

im not saying blackrock will definitely get accepted. gensler can veto them all for many many many months using delays.. but blackrock appears to be a few steps ahead of the game

You mentioned three out of 12 or is it 3 out of 13.

So of course, based on your earlier post, you had assumed no more than 4 of the spot BTC ETFs would get approved at the same time (which I placed within two weeks as being at the same time), but your mentioning of Ark seems to be presuming that they might get approved, but the fact that they are so small, you may well be assuming that they are very unlikely to get approved anyhow.

im still running scenarios based on details i find.
EG knowing that alot of grayscale(with 630k btc holdings) some large share holders will want to exit grayscale which can cause some baskets of shares to dissolve and move btc baskets out of grayscale(coinbase) custody

where as ark21(with just 150btc holdings) will want to recruit agents/brokers and bring in new btc basket to lock up and create shares.

the impact of grayscale on the public spot (with or without darkpools) wont see mega bull run spot activity
the impact of ark21 on the public spot (with with darkpool) wont see mega bull run spot activity
the impact of ark21 on the public spot (without darkpools) WILL see mega bull run spot activity
the impact of blackrock on the public spot (with or without darkpools) WILL see mega bull run spot activity

For sure the introduction of the ETF will definitely impact the market microstructure.
You are suggesting there will be more dark pool trading, and this is for sure one of the differences, but for sure there will be a clear distinction before and after the ETF launch in spot trading.
Not necessarily attaching a "good" label to this.

yes in this case coinbase will be the custodian/reserve.. much like gold reserves, the coins stay in custody, but the ownership labels of each basket changes, so coinbase will be doing backroom darkpool trading aka otc

though im sure any large holders with more then one basket worth of coins will also make their own darkpool

Of course, you cannot sell those corn in the open books; In confusing terminology, the OTC desks (which, in the end trade against the largest CEX customers) are here to help.

 The funny thing: the OTC desks actually trade on CEX. OTC here means that all the trading happens outside the open books, not outside the exchanges. When a trade happens the OTC desk ends up trading in a block trade In the venue

to convert share to BTC is easy. the custodian has to just give away the BTC, institutions love it. custodians love it. SEC/IRS hate it

however.. scenario time:
imagine agent buying 5,000BTC at $35,000 each =$175m to lock up 50000BTC to become collateral for shares
coinbase holds onto the BTC. .. but the cash is not also held onto by coinbase.. the seller that sold the BTC takes the cash out of coinbase

and custodian announces locking the 5000btc and the ETF produces shares for the agent...

(ignore the etf market,, lets continue the scenario at the CEX)
now image 100,000 people just play the CEX markets starting from $350 each for 0.01 amounts coinbase doesnt keep the cash the buyers and sellers deposit and withdraw
but imagine after 100,000 trades of other users cause the price to pump to $70k/coin
again remember no cash left in coinbase
the 100,000 CEX customers withdrew and went to bed, thus the cash was not coinbases to mis appropriate anyway


so now imagine share holders of an ETF were to want to sell a basket of shares amounting to 5000btc via the agent(destroying the shares).. to close a basket
unlocking 5000btc means having to search for $350m of cash to make share basket redemptions sales whole compared to share price.. OR sell on the market causing a price crash meaning the amount combined of the sales wont meet the agreed share sale price earlier in the day

so the SEC dont want agents/brokers closing off their baskets (destroying shares) to exit the ETF  easily at all
because it would be difficult for coinbase to find $350m to cover the basket

yes offering BTC "in-kind" is easier for the ETF, broker and custodian... as no cash needs to be found to honour the exit..
X shares=X sats.. easy right

but the SEC doesnt want "in-kind" redemptions (destroying shares to unlock btc) because then CFTC will be the regulator

the SEC want basket redemptions to be a very rare event, planned well ahead of time to give time for other brokers wanting baskets to become etf agents to get in, to buy in at set price of 'match day'. purely so that closing off of baskets can trigger cap gains/losses without causing a spot cex price crash

---

with all that said.. what i see happening is where baskets would need to be bought and sold, off-market in 'darkpools' between institutions and large agents.. to not affect the public spot cex markets

This is quite an interesting point and a nice explanation for an otherwise frankly (pun intended) inexplicable decision.
On the other hand, it still surprises me how all the major issuers agreed on an in-kind process only.
What was the problem on their side in cash creation/redemption?