The ProShares Bitcoin Strategy ETF (BITO) debuted today on the NYSE. The Grayscale Bitcoin Trust (GBTC) is the world’s biggest bitcoin fund.

Grayscale Investments LLC, together with the NYSE, has filed with the SEC to convert the Grayscale Bitcoin Trust (GBTC) into a physical bitcoin ETF. They applied on the same day that the first bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (NYSEArca: BITO) opened for trading. (Bloomberg)

Yesterday, Jennifer Rosenthal, Grayscale’s communications director, had tweeted:

“@Grayscale’s position has always been clear: we are 100% committed to converting $GBTC — and our product family — into ETFs, when the SEC has *formally* expressed their requisite comfort with the underlying Bitcoin market.”

“Today, I’m happy to confirm that @Grayscale *WILL* file for $GBTC to be converted into an #ETF as soon as there’s a clear, formal indication from the SEC.”

GBTC is so large it holds about 3.4% of the global supply of bitcoin.

Grayscale’s application puts the SEC on a clock – to either reject or delay the conversion. The SEC has consistently shown to have reservations about approving an ETF backed by physical bitcoin, while it allowed the futures-backed version from ProShares to launch.

Gensler on BITO

Speaking on CNBC’s Squawk on the Street on Tuesday, SEC chairman Gary Gensler had this to say about BITO:

“What you have here is a product that’s been overseen for four years by the U.S. federal regulator CFTC, and that’s being wrapped inside of something within our jurisdiction called the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection.”

Grayscale: Futures and spot joined at the hip

“We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied, that we have the willingness to allow or clear the way for a Bitcoin futures ETF in the market, and also clear the way for a spot ETF,” said Michael Sonnenshein, Grayscale’s CEO.

By converting GBTC into a bitcoin ETF Grayscale will solve two problems at one go. One, it will protect the fund from being marginalized by the far more liquid and easily traded bitcoin ETFs. Two, it would help close the discount that has stubbornly existed between the value of the trust’s holdings and the price at which it is traded.

Listing joy for BITO

Shares of the BITO ETF rose over 3% to $41.44 on their debut today on the NYSE. The ETF charges an expense ratio of 0.95%.

The ETF invests only in bitcoin futures contracts, not in spot, or physical bitcoin.

On the same Squawk on the Street interview, Gensler warned investors that bitcoin and its futures were a highly speculative asset class and that the new ETF still had that “same aspect of volatility and speculation.”

Related Story: Bitcoin Futures ETF From ProShares To Start Trading Tomorrow On The NYSE [Updated]