Grayscale tells SEC that turning biggest bitcoin fund into ETF will unlock $8 billion for investors

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Grayscale, the asset manager running the world's largest bitcoin fund, met privately with the Securities and Exchange Commission last week in an effort to persuade the regulator to approve the conversion of its flagship fund into an ETF, CNBC has learned.

Turning the Grayscale Bitcoin Trust into a NYSE-traded ETF would broaden access to bitcoin and enhance protections while unlocking up to $8 billion in value for investors, according to a 24-page presentation obtained by CNBC.

That's because the trust, known by its GBTC ticker, has traded at an average 25% discount to the price of its underlying asset since early 2021, a discount that should disappear upon conversion, the company said.

Led by CEO Michael Sonnenshein, Grayscale has engaged in a high-stakes campaign to pressure the U.S. regulator to approve the first spot-based bitcoin ETF. The asset manager has watched as competitors including ProShares win approval for futures-based bitcoin exchange-traded funds, showing that the SEC is more comfortable with products based on futures over those based on bitcoin.

A spot-based bitcoin ETF would be a significant milestone in the adoption of digital assets because it would open them up to ordinary investors in a familiar wrapper that trades like a stock. The goal has eluded the industry for more than five years. Grayscale's first application for a spot bitcoin ETF was in early 2017.

GBTC holds roughly 3.4% of the world's bitcoin and is owned by more than 850,000 U.S. accounts, according to Grayscale. The fund, which enabled institutional investors like Ark Invest's Cathie Wood to bet on bitcoin, ballooned to more than $30 billion in size before the recent crypto retrenchment brought its assets to $20.1