UK advisers and wealth managers divided on Grayscale Bitcoin court win

US-based crypto-asset manager, Grayscale, this week won a court ruling against the Securities and Exchange Commission over its attempt to launch a US-listed exchange traded fund that will track the price of Bitcoin.

The SEC had denied Grayscale's application to convert its Bitcoin Trust into an ETF but was overruled by a Court of Appeals in DC. The price of Bitcoin and other leading crypto coins surged on the news of Tuesday's decision.

Reflecting on the win, Grayscale CEO Michael Sonnenshein said: “This is a historic milestone for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper. Grayscale has adhered to U.S. financial rules and regulations in building our product suite since our founding in 2013, underpinned by one fundamental belief: investors deserve transparent, regulated access to crypto. It’s incredibly exciting that we are one step closer to making a U.S. spot Bitcoin ETF a reality.”

In the UK, financial advisers and wealth managers were divided about the decision. Wes Wilkes, CEO at the Newcastle-under-Lyme-based wealth manager, Net-Worth Ntwrk, was broadly positive: “The Grayscale case and decision are worthy of the coverage they got. This decision opens the door to a Bitcoin ETF in the US, a regulated vehicle and of course access to billions of pounds of investors' money. Wealth managers can ill afford to ignore this development or the crypto ecosystem as a whole. Whilst it remains nascent relative to the rest of the 'investing world', many of our clients hold, trade or play with crypto, though we do not include their holdings in any financial plan or use them as part of their asset base. It is always an interesting discussion point and I believe that as long as people are using disposable money that would not hurt them should it go to zero, then whilst we cannot advise or opinionise on it, we appreciate being made aware of it.”

Scott Gallacher, chartered financial planner at Leicestershire-based independent financial advisers, Rowley Turton, was more sceptical: “I've consistently voiced my doubts about cryptocurrencies and wouldn't advise them to my clients.” He added: “A Bitcoin ETF also seems completely contrary to the whole principle of Bitcoin, i.e. decentralised ownership, control and autonomy over your financial assets. Bitcoin was designed to operate outside the traditional financial system, enabling individuals to have direct ownership and control over their digital wealth, free from intermediaries like banks and financial institutions.”

Stuart Crispe, founder of financial services directory, Sunny Avenue, also had concerns and said that the court ruling does not guarantee anything: “The court ruling definitely increases the odds of approval for an ETF, but it doesn't mean guaranteed approval. The real issue with a Bitcoin ETF is fraud and manipulation. Until the SEC can figure out how to regulate Spot Bitcoin I don't see how they can move forward with such a speculative asset. Until that day comes, no one should be considering investing money they can't afford to lose, such as their pension.”

But Chris Barry, director at law firm, Thomas Legal, took a different stance, arguing: “The news that Greyscale can now launch a Bitcoin ETF is perfect timing for the market. Bitcoin has been the highest-performing asset class over the past decade, dwarfing returns from traditional investments such as real estate, gold and tracker funds.”

Barry continued that people being unfamiliar with the idea of self-custody, where crypto users take sole possession of their wallet’s private keys rather than trust them to an exchange, is the one thing that has held the crypto market back to date: “This all sounds very exciting but many investors still haven't dipped their toes in the water because they aren't familiar with the concept of self-custody. A Bitcoin ETF will allow exposure to the asset without the need to take responsibility, and the risk, of safely securing Bitcoin. Bitcoin and other Altcoins have received more retail and institutional money in recent years and with the uncertainty around property prices and the devaluing of fiat currency by central banks, investors need to find a store of value that will be decentralised and flexible, whilst also providing a good return. An ETF will allow many investment funds to invest in Bitcoin without the complex regulatory sign-off needed for self-custody."

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