Michael Sonnenshein, Chief Executive Officer of Grayscale Investments LLC, speaks virtually during a Crypto Summit on February 25, 2021.

Daniel Acker | Bloomberg | Getty Images

Grayscale Investments plans to file an application early next week to convert the world’s largest bitcoin fund into a spot ETF, according to an expert.

The investment firm had intended to file its application with the Securities and Exchange Commission as soon as the agency approves efforts by competitors to create a futures-based Bitcoin ETF, the person said. That happened late Friday.

The Grayscale application begins with a 75-day review phase, said the source, who refused to be identified because the New York-based company has not disclosed its plans.

If approved, Grayscale’s ETF would be another step in legitimizing the emerging crypto asset class. Bitcoin has proven to be resilient, nearing an all-time high of over $ 60,000 on Friday, even after setbacks, including the ban imposed by China last month.

While the Bitcoin futures ETF’s upcoming debut is going to be significant, it is viewed as an inadequate move by some crypto investors as it would be tied to derivative contracts traded on the Chicago Mercantile Exchange rather than actual bitcoins.

However, Grayscale’s spot bitcoin application represents an investment backed by bitcoins, not derivatives tied to it.

Grayscale holds a significant chunk of global Bitcoin holdings for its trust, made known by the GBTC ticker. GBTC had $ 38.7 billion in assets under management on Friday.

The company, a pioneer in crypto investing that allowed institutional investors like Ark Invest’s Cathie Wood to bet on Bitcoin, originally publicly applied for an ETF in January 2017. It withdrew the application in October of the same year after the SEC stated that it was nonetheless comfortable with the Bitcoin market.

Grayscale’s move could be an attempt to force the hand of the SEC. If they’re comfortable with Bitcoin futures, regulators should also be familiar with the underlying market, the source said.

Of course, the SEC could postpone or reject the grayscale application.

Last month, Grayscale’s CEO publicly criticized the SEC’s apparent preference for futures-based ETFs, calling it a “short-sighted” move that could harm investors.

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