0
0
Grayscale Introduces New Bitcoin ETF Product to Combat Outflows
Grayscale has unveiled plans for a new Bitcoin ETF product to address the significant outflows that have been impacting its Grayscale Bitcoin Trust (GBTC) over the past couple of months. The introduction of the Grayscale Bitcoin Mini Trust, with the ticker “BTC,” is outlined in an S-1 statement filed recently, indicating a strategic move to offset the outflows experienced by the larger GBTC fund. This new product is intended to divert a portion of GBTC’s underlying Bitcoin holdings into the Bitcoin Mini Trust, offering existing GBTC shareholders compensation through a proportional distribution of BTC shares.
The filing assures shareholders that the Spin-Off process will not trigger a taxable event for either GBTC or its investors. While specific details regarding the amount of Bitcoin being redirected from GBTC and the management fee for the new fund remain undisclosed, industry analysts speculate that the initiative aims to offer a more cost-effective alternative to investors.
Since converting to a spot Bitcoin ETF earlier this year, GBTC has experienced significant redemptions totaling 229,000 BTC, without any days of net inflows recorded. In comparison, rival offerings from BlackRock and Fidelity have attracted 204,000 and 128,000 BTC respectively, overtaking Grayscale in total Bitcoin holdings. The preference for these alternative funds is largely attributed to lower fees, with competitors charging between 20 to 30 basis points per year, as opposed to Grayscale’s 1.5% fee.
Reducing fees for GBTC poses a challenge for Grayscale as it serves as a major revenue stream for its parent company Digital Currency Group. Analysts suggest that the Spin-Off strategy strikes a balance between addressing investor demands for reduced fees and maintaining the company’s revenue stream. While a drastic fee reduction could result in a substantial loss of revenue, the Spin-Off presents a viable compromise to satisfy both parties involved.
Image/Photo credit: source url
