Grayscale Investments said on Tuesday that it has formally applied with the Securities and Exchange Commission to convert its Grayscale Bitcoin Trust /zigman2/quotes/203330852/composite GBTC -7.80% into an exchange-traded fund that is pegged directly to the world's No. 1 digital asset rather than focus on creating a futures-linked ETF. The announcement comes as The ProShares Bitcoin Strategy ETF /zigman2/quotes/230440344/composite BITO -6.61% began trading on Tuesday under the ticker "BITO" on the New York Stock Exchange as a futures-linked ETF, which is being hailed as a major milestone in crypto. GBTC's aim to convert its trust, would allow the largest bitcoin product to retain its dominance as a crypto investment vehicle, with some $33 billion in assets. However, it isn't clear that SEC Chairman Gary Gensler, who has said he prefers a futures-based ETF because it offers better investor protections, will approve a bitcoin ETF that is directly pegged to bitcoin. Futures allow investors to indirectly bet on an underlying asset. Critics say that futures-based ETFs are vulnerable to divergences in the prices of the futures and the underlying assets they track. "At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset," wrote Dave LaValle, global head of ETFs at Grayscale Investments, in a statement.