Grayscale Consider Returning Capital To Shareholders If GBTC’s ETF Effort Failed

If Grayscale Investments is unable to convert the product into an exchange-traded fund (ETF), it will look at ways to restore the capital of its Grayscale Bitcoin Trust to shareholders.

According to a letter to investors from Grayscale Chief Executive Michael Sonnenshein, these possibilities can include a tender offer for up to 20% of the trust’s outstanding shares valued at $10.7 billion. During a tender offer, shareholders would be directly urged to sell or tender their shares for a predetermined price and duration. It was still unclear when things would happen, and two different approvals would be needed.

“In the event we are unsuccessful in pursuing options for returning a portion of the capital to shareholders, we do not currently intend to dissolve GBTC, but would instead continue to operate GBTC without an ongoing redemption program until we are successful in converting it to a spot Bitcoin ETF,” Sonnenshein said in the letter.

The Grayscale Bitcoin Trust trades like a closed-end fund, which frequently trades at a premium or discount to the value of its holdings and goes by the ticker code GBTC.

The discount rate has significantly increased in the midst of this year’s decline in digital assets. According to YCharts, GBTC was trading at a 48.57% discount to the value of the bitcoins it owned on Friday. At the moment, GBTC shares can only be sold on the open market at a loss because they can neither be generated nor redeemed. The trust levies an annual fee of 2%.

Because GBTC shares cannot currently be redeemed, sellers are forced to sell their holdings for a lower price. This could be fixed by making GBTC into an exchange-traded fund.

Spot Bitcoin ETFs have, however, received scathing criticism from the U.S. Securities and Exchange Commission (SEC), which has consistently rejected all requests for years. In June, Grayscale sued the SEC; the legal battle is ongoing.

Sonnenshein asserted:

“We remain steadfast in our belief that the conversion of GBTC to an ETF is in the best interest of investors, and we remain 100% committed to that endeavor. This is and always has been the business priority for the Grayscale team.”

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Website: coincu.com

Harold

Coincu News