Grayscale, the largest wealth management firm in the world, revealed yesterday in a blog post 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 into an ETF pending regulatory approval
Grayscale filed for a bitcoin ETF in 2016. However, it ended up withdrawing its application the following year due to the unfavorable regulatory climate at the time. The digital asset manager therefore decided to launch his trust fund to cater to institutional investors.
Four years later, Grayscale is poised to renew its push for SEC approval for a bitcoin ETF. “We are 100% committed to converting GBTC into an ETF. The timing will be determined by the regulatory context ".
The company noted that switching from a bitcoin fund to an ETF is the most logical next step in the evolution of its bitcoin offering. Grayscale launched the Bitcoin Trust in 2013. Institutional investors send funds to Grayscale and the company uses the money to buy bitcoins. 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 own the asset.
Grayscale, however, warned that "investors shouldn't know that such products will never get approval due to a variety of factors, including primarily regulatory considerations." But if the company succeeds in converting the GBTC into an ETF, the shareholders who own GBTC shares will not be required to do anything and the management fees will be drastically reduced.
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. Looking ahead, GBTC's premium was over 30% just five months ago. Now, it has surprisingly plunged below -10% at the time of publication.
Observers speculate that the current discount caused by stiff competition, particularly from Canadian bitcoin ETFs and the Osprey Bitcoin Fund, could have prompted Grayscale to make this decision.
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