Grayscale, the world’s largest Bitcoin fund, has long sought to convert it into a spot Bitcoin ETF but was rejected by the United States Securities and Exchange Commission (SEC). Investors are now fighting back and have sent nearly 200 letters to the committee to support the fund’s transition.

Grayscale investors speak out

As Bloomberg reports, the SEC received more than 170 letters from Grayscale investors in February alone. This follows a public referendum by the regulator last week that asked people to give their thoughts on Grayscale’s recent application and potential Bitcoin ETFs that exist as a scam.

An exchange-traded fund (ETF) is simply a basket of securities (or cryptocurrency) that tracks an underlying index. The public is free to buy shares of these funds for access to a specific asset.

Many such products have popped up around the world to directly track the value of Bitcoin and Ethereum — but none have landed in the US yet. Currently, the SEC only licenses a handful of bitcoin futures ETFs, which are backed by futures contracts rather than the actual cryptocurrency.

Grayscale CEO Michael Sonnenshein reached out to investors and encouraged them to file a letter with the SEC regarding converting funds into an ETF. He said investors have shown a lot of support for the transition so far.

GBTC is under pressure

Grayscale Bitcoin Trust (GBTC) is currently a trust. In this format, stock prices cannot be traded to accurately reflect market sentiment. As a result, the fund’s shares have been discounted from the underlying Bitcoin price for almost a year.

Shares are down 17% since the start of 2022 — compared to Bitcoin’s 13% drop. On Thursday, the price closed 25% below its bitcoin holdings.

Investors can feel the pain. All of their letters to the SEC relate to the Commission’s refusal to allow a spot Bitcoin ETF.

An investor named Clay Craven wrote, “I don’t feel protected by the SEC. It is time the SEC approved the conversion of the GBTC ETF and stopped hurting investors and the country by forcing capital overseas where cash BTC ETFs are already traded and regulated by regulators.

Investor protection is a major concern, quoted by SEC Chairman Gary Gensler when expressing his preference for bitcoin futures ETFs over spot ETFs.

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