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Grayscale Plans to Convert Bitcoin Fund to ETF

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What You Need to Know

  • Grayscale says it is “100% committed to converting GBTC to an ETF.
  • It does not plan to submit a Bitcoin ETF application, though, noting its confidence in its positioning and engagement with the SEC.
  • The firm's Bitcoin fund currently has $34 billion in assets.

Grayscale, the sponsor of Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund, said Monday that it is “100% committed to converting GBTC to an ETF,” but “the timing will be driven by the regulatory environment.”

To date, the SEC has not approved any Bitcoin or other cryptocurrency ETF, though several applications are pending before the agency, and three Bitcoin ETFs are trading on the Toronto Stock Exchange in Canada and available only in Canada.

A sponsor of one of those ETFs, CI Global Asset Management, has just launched a Bitcoin mutual fund in Canada, also available only in Canada. The fund, called the CI Galaxy Bitcoin Fund, will invest “all or substantially all of its assets in the CI Galaxy Bitcoin ETF,” with which it intends to merge later this year. The subadvisor for the ETF and the fund is Galaxy Digital Fund Management.

Grayscale’s Plan

Grayscale first filed an application with the SEC for a Bitcoin ETF in 2016 but ultimately withdrew its application following discussions with the SEC that lasted “the better part of 2017,” according to Grayscale’s announcement.

Firms typically withdraw applications that are facing rejection at the SEC, which is what several firms have done, though at least one of those firms, Van Eck, followed up with a new Bitcoin ETF application.

“While several firms have submitted Bitcoin ETF applications in the form of an S-1 or 19b-4 to the SEC, we are confident in our current positioning and engagement with the SEC,” said Grayscale, referring to SEC forms that public companies must file when listing new securities and that exchanges must file to list those securities.

Grayscale noted that its Bitcoin fund and Ethereum Trust (ETHE) are “the only two crypto funds in the world with the distinction of being an SEC-reporting company.”

The firm said when GBTC, which has $34 billion in assets, is converted into an ETF, investors owning publicly traded GBTC shares will automatically receive the ETF shares, whose  management fee “will be reduced accordingly.”

The company recently announced the launch of five new crypto asset trusts, which are available as private placements for accredited investors only for a $25,000 minimum and a one-year holding period, after which they are expected to trade on the secondary market.

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