Grayscale CEO sees spot bitcoin ETF as first step toward ‘normalizing’ crypto

It’s been a long road for spot bitcoin ETF filers — and today the U.S. Securities and Exchange Commission finally approved all 11 standing applications from issuers.

“I’ve known for 10 years that this was going to happen,” Michael Sonnenshein, CEO of Grayscale Investments, said on TechCrunch’s Chain Reaction podcast. “We always knew the investor sentiment would get there, regulators would get there and the financial adviser community would get there.”

Grayscale, a digital asset investment firm that was one of the 11 firms to file for a bitcoin spot ETF, is best known for its Grayscale Bitcoin Trust (GBTC), which has now been converted, or “uplisted,” into its new bitcoin spot ETF product.

The 10 other issuers are BlackRock’s iShares Bitcoin Trust, ARK 21Shares Bitcoin ETF, Bitwise Bitcoin ETP Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Trust, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, Valkyrie Bitcoin Fund, Hashdex Bitcoin ETF and Franklin Bitcoin ETF.

Before now, the only crypto-focused ETFs in the U.S. were tied to futures contracts for bitcoin and Ethereum. Spot-focused crypto ETFs purport to allow investors and institutions alike to invest in crypto asset through a wrapper. When an investor buys shares in a spot-based ETF, they’re buying shares of the fund that owns that asset (e.g., BlackRock) instead of directly owning it, giving investors a regulated layer of protection.

While futures ETFs marked a big milestone in 2021, Sonnenshein believes the most critical one that brought these bitcoin spot ETF approvals was the D.C. Circuit Court of Appeals’ ruling in favor of Grayscale against the U.S. Securities and Exchange Commission in the case of a bitcoin spot ETF in the summer of 2023.

While that decision vacated the SEC’s previous denial order of “uplifting” GBTC into an ETF, Sonnenshein thinks “it was a moment not only of validation for us as an asset manager, but for the industry as a whole . . . that was really the catalyst that broke the logjam.”

Going into the bitcoin spot ETF approvals, there was a lot of pent-up demand, Sonnenshein said. “Many industry watchers and observers, particularly around the financial advisor market realized, even just here in the U.S. alone, there is about $30 trillion worth of advised wealth.”