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Grayscale Seeks Approval for ‘Mini’ Bitcoin ETF to Enhance Investor Benefits
Grayscale, well-known as the issuer of the world’s most extensive Bitcoin exchange-traded fund (ETF), has formally submitted an application for a more compact version of its popular Grayscale Bitcoin Trust (GBTC) ETF under the ticker symbol “BTC.” This move is detailed in a filing made with the US Securities and Exchange Commission (SEC) on Mar. 12.
Grayscale elaborated on the potential benefits of this development, stating, “This would be net-positive for existing GBTC investors, who would benefit from a lower blended fee with the same exposure to Bitcoin, spanning ownership of shares of both GBTC and BTC.”
If authorization is granted, the proposed ETF will introduce a cost-efficient variation of the GBTC ETF. It will be seeded with an undisclosed percentage of GBTC, and current GBTC stakeholders will smoothly transition to possessing shares in both GBTC and BTC, ensuring tax-free implications.
The proposed ETF is planned to be listed on the New York Stock Exchange, functioning independently from Grayscale’s GBTC fund.
Rationale Behind Grayscale’s Decision to Launch a ‘Mini’ ETF
James Seyffart, an ETF analyst at Bloomberg, characterized Grayscale’s strategic step as a shrewd attempt to stay competitive in the market without compromising on fees for its profitable GBTC investment offering.
Seyffart highlighted that the new trust could provide GBTC investors with tax-free exposure to the primary digital asset. He expressed, “[The Mini ETF] definitely helps out long term GBTC holders — particularly the taxable ones who were sorta stuck with potential capital gains tax hits. Not a full solution. But way more helpful than launching a standalone product from scratch.”
Introducing a miniature version of the ETF could also deter customers from shifting to more cost-effective alternatives. Since its establishment in January, GBTC has experienced outflows surpassing $11 billion, mainly due to its high 1.5% fees, markedly higher than competitors charging 0.3% or lower.
Eric Balchunas, a senior ETF analyst at Bloomberg, shared his insight, “This way, [Grayscale] can keep some of that juicy 1.5% assets while placating a bit of investors with this treat. Also, BTC then gives something competitive for their salespeople to have when talking to advisors who probably find a 1.5% fee an instant dealbreaker.”
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