2021-4-6 22:25 |
The world’s largest asset management firm Grayscale, revealed in a blog post today that it is planning to convert its $34 billion Bitcoin Trust Fund (GBTC) into an exchange-traded fund (ETF).
Grayscale is “100% Committed” To Converting Its GBTC To An ETF Pending Regulatory ApprovalGrayscale filed for a bitcoin ETF back in 2016 but ended up withdrawing its application the following year owing to the unfavorable regulatory climate at the time. The digital asset manager then decided to launch its trust fund to cater to institutional investors.
Four years down the line and Grayscale is ready to renew its push for an SEC approval for a bitcoin ETF.
“We are 100% committed to converting GBTC into an ETF. The timing will be driven by the regulatory environment.”
The firm noted that the transition from a bitcoin fund to an ETF is the next logical step of its bitcoin offering’s evolution. Grayscale launched the Bitcoin Trust in 2013. Institutional investors send funds to Grayscale and the firm uses the money to purchase bitcoin. Grayscale then sells shares of the Trust in the stock market. This means that the Bitcoin Trust offers institutional investors exposure to the flagship cryptocurrency without them having to hold the asset.
Grayscale, however, warned that “investors should not assume that such products will ever obtain an approval due to a variety of factors, including primarily regulatory considerations.” But should the firm succeed in converting the GBTC to an ETF, the shareholders of the GBTC shares will not be required to do anything and the management fees will be reduced dramatically.
Is The Negative GBTC Premium The Reason For This Move?The Grayscale Bitcoin Trust has been trading at a negative premium since February. This means that the fund is trading below the market price of bitcoin. For perspective, GBTC’s premium was above 30% just five months ago. Now, it has surprisingly plunged below -10% at the time of publication.
Observers are speculating that the current discount caused by stiff competition particularly from Canadian bitcoin ETFs and the Osprey Bitcoin Fund could have prompted Grayscale to come to this decision.
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