Not all hope is lost for bitcoin ETF believers, Grayscale Investments says.
Securities and Exchange Commission Chairman Gary Gensler dampened excitement around possible approval for a bitcoin-based exchange-traded fund last week, saying digital currencies need much more regulation before entering the ETF universe.
"We read Chair Gensler's comments to be very positive ... because the story is no longer if there's going to be a bitcoin ETF but when there's going to be a bitcoin ETF," LaValle said.
Grayscale plans to convert GBTC into an ETF when the SEC warms to the idea — but LaValle recognized that will require regulatory oversight, just like with any other asset class that eventually evolved into an ETF.
"When the SEC gets comfortable that there's enough transparency, enough maturity, in the underlying market, we're going to see an ETF," he said.
The recent approval of a bitcoin futures-based mutual fund from ProShares is a step in the right direction, ProShares' head of investment strategy Simeon Hyman said in the same interview.
The Bitcoin Strategy ProFund (BTCFX) is up nearly 14% since its July launch and is primarily invested in front-month bitcoin futures contracts, which tend to be highly correlated to bitcoin's spot price.
"The advantage of this approach is clear. The futures market is regulated. So, you've got the CME [Chicago Mercantile Exchange], the CFTC [Commodity Futures Trading Commission], you've got the clearinghouse, and then you're in a mutual fund that people understand well and you can get in and out every day at NAV [net asset value]," Hyman said, calling the fund "a really important access point" for investors.
If the SEC decides to approve a futures-based bitcoin ETF first, then ProShares would likely be in the sweet spot. But either way, the market for bitcoin-based products is still in its "early innings," Hyman said.
"There will be a myriad of ways for folks to get exposure over time," he said. "When those opportunities avail themselves, we'll be exploring them very carefully."
Sign up for our weekly newsletter that goes beyond the livestream, offering a closer look at the trends and figures shaping the ETF market.