Grayscale, a leading digital asset manager, aims to convert its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF). The move could eliminate GBTC's steep 8% discount and better align its pricing with bitcoin's actual market value.

Pending SEC approval, Grayscale plans migrating GBTC from over-the-counter markets to the NYSE Arca exchange. The shift would facilitate easier share creation and redemption to keep pace with bitcoin prices. Currently, closed-end GBTC trades at a persistent discount to its bitcoin holdings.

The announcement came just after Grayscale met with the SEC, sparking speculation about the significance of timing. Analyst Eric Balchunas noted Grayscale peculiarly mentioning reliance on Regulation M relief, which the SEC could potentially wield to hinder ETF progress.

With bitcoin rallying past $39,000, GBTC conversion to an ETF would offer institutional investors a more precise and regulated bitcoin exposure vehicle. The news helped propel the 3% bitcoin price surge seen over Tuesday.

Other ETF applicants like SkyBridge also aim to transition existing trusts into spot bitcoin ETFs if approved. The SEC extended decision deadlines last week, seen as intentionally aligning timetables for coordinated approvals by January 10th according to analysts.