Grayscale plans spin off of spot bitcoin ETF
FILE PHOTO: Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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By Niket Nishant and Hannah Lang
(Reuters) -Digital asset manager Grayscale Investments on Tuesday filed for a spin-off of its spot bitcoin exchange-traded fund (ETF), the Grayscale Bitcoin Trust (GBTC).
The spin-off is part of a bid to offer investors lower-fee exposure to bitcoin, according to a person familiar with the matter.
GBTC – which in January received approval to convert from a trust to an ETF – currently has higher fees than its peers, one of the key factors in drawing investors to rival ETFs, Reuters has reported.
Grayscale filed to list shares of a new investment product, the Grayscale Bitcoin Mini Trust, which will receive a certain amount of bitcoin held by GBTC. In exchange, current GBTC shareholders will get stock in the Mini Trust, the company said.
Since January, GBTC has seen capital outflows of $11.05 billion, according to data from crypto research firm BitMEX Research, even as bitcoin climbed to an all-time high and competitors recorded inflows over the same period. Grayscale is yet to determine the fees the Mini Trust will charge, according to the filing. Following the spin-off, both GBTC and the Mini Trust will operate independently, it said. The company’s landmark victory in a legal fight with the Securities and Exchange Commission (SEC) led to the approval of spot bitcoin ETFs – investment vehicles that allow shareholders to gain exposure to bitcoin without directly holding it – in January. Since the approval, competitors BlackRock (NYSE:BLK)’s iShares Bitcoin ETF and Fidelity Wise Origin Bitcoin Fund have recorded inflows of $10.59 billion and $6.37 billion, respectively. The ETF euphoria and hopes that the Federal Reserve will soon cut interest rates have propelled bitcoin, the world’s biggest cryptocurrency, above $72,000. Bitcoin was last trading at $72,095, down 0.09% on the day.
