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Grayscale readies GBTC for Bitcoin ETF future with key amendments

TL;DR

  • Grayscale proposes amendments to the Grayscale Bitcoin Trust (GBTC) agreement, aiming to align its structure with competitors like BlackRock.
  • The proposed changes include transitioning from monthly to daily fee collection and maintaining the current 2% management fee.
  • Grayscale also enhances operational efficiency by allowing asset commingling in an omnibus account, facilitated by Coinbase Custody.

In a significant development, Grayscale, the manager of the Grayscale Bitcoin Trust (GBTC), has announced proposed amendments to the trust’s agreement. This move is a strategic step towards preparing for a potential uplisting to a spot Bitcoin (BTC) exchange-traded fund (ETF). The updates are designed to align GBTC’s structure more closely with other market applicants, such as asset management behemoth BlackRock, thereby enhancing its competitive position in the evolving cryptocurrency market landscape.

The proposed amendments, subject to shareholder approval, encompass two major changes. The first change involves transitioning from the current monthly fee collection to a daily basis. This adjustment, while significant, does not incorporate any fee reduction, although Grayscale has committed to considering this in the future. Presently, GBTC imposes a 2% management fee, notably higher than the fees charged by firms awaiting approval for spot Bitcoin ETFs, which typically range from 0.7% to 1%.

The second update focuses on the operational efficiency of the trust. It permits the commingling of assets in an omnibus account, which is aimed at simplifying the process of creating and redeeming shares. This enhancement, facilitated through the Coinbase Custody service – also used by BlackRock iShares and other ETF applicants – is crucial for ensuring seamless trading and accurate tracking of underlying assets.

Grayscale prepares GBTC for NYSE uplisting

Grayscale’s initiative to amend its trust agreement is a proactive measure to position GBTC optimally for an uplisting to NYSE Arca as a spot Bitcoin ETF, subject to regulatory clearances. However, it is important to note that these amendments are not mandatory for converting to an ETF, as indicated in the filing. Shareholders are given a 20-day period from the filing date to vote on these changes.

This development occurs amid broader industry expectations that the U.S. Securities and Exchange Commission (SEC) will soon approve multiple spot Bitcoin ETFs. The anticipation of this approval has contributed to a rally in the crypto markets, with Bitcoin reaching its highest level since May 2022. Despite this optimism, predicting the demand for such a BTC ETF remains complex, with estimates varying widely. For instance, crypto firm NYDIG projects the demand for a spot bitcoin ETF to be around $30 billion.

SEC nears decision on Bitcoin ETFs

Grayscale has been actively engaged in legal efforts to secure SEC approval for a Bitcoin ETF, a financial instrument already available in Europe and Canada. As the legal scenario started tying in favor of Grayscale, other major financial institutions, including BlackRock and Fidelity, entered the fray with their ETF applications. Given the current market environment, it would not be surprising if a traditional finance entity like BlackRock first received the SEC’s nod.

By aligning GBTC’s structure with market leaders and enhancing operational efficiencies, Grayscale is not only preparing for a potential ETF uplisting. Still, it is also positioning itself as a forward-thinking player in the crypto finance sphere. The outcome of these amendments and their impact on the broader market, especially in the context of regulatory approvals, will be closely watched by investors and industry analysts alike.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Mutuma Maxwell

Maxwell especially enjoys penning pieces about blockchain and cryptocurrency. He started his venture into blogging in 2020, later focusing on the world of cryptocurrencies. His life's work is to introduce the concept of decentralization to people worldwide.

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