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BlockFi’s annual fee falls 0.25% below what industry leader Grayscale Bitcoin Trust (GBTC) charges investors as BlockFi aims to compete with GBTC for the top spot.
BlockFi Management LLC as a sponsor will charge a fee of 1.75% and BTC held in BlockFi’s trust will be custodied by Fidelity Digital Assets Services LLC via an enterprise-grade custody solution purpose-built for institutional investments.
According to the announcement, the company Grant Thornton LLP will be the BlockFi Bitcoin Trust’s financial auditor with Davis Polk & Wardwell LLP set to be the legal counsel to BlockFi in connection with the Trust. The crypto lending firm will also use Coin Metrics Inc. in providing index and pricing data.
BlockFi’s annual fee falls 0.25% below what industry-leader and now rival Grayscale Bitcoin Trust (GBTC) charges investors as it aims to compete with GBTC for the top spot. According to the website of the lending firm, the fund started taking subscriptions on February 5, with its 1.75% management fee in effect and now has almost $30 million in assets under management. The firm expects the trust to be available and tradable through brokerage accounts in about six to 12 months.
The announcement also revealed that Initial subscribers to BlockFi’s Trust are expected to include BlockFi as well as use BTC to select and subscribe to institutional investors. When an initial lockup expires, shares might become available for a secondary or subsequent investment on a wider range of recognized brokerage platforms.
Zac Prince, Founder and CEO of BlockFi, speaking after the announcement stated:
“Given the level of institutional activity in recent months and demand for new, professional-grade investment vehicles, the timing of BlockFi Bitcoin Trust is ideal.”
“As we work to broaden the availability of this vehicle to retail brokerages, we expect this product will facilitate greater investments in digital assets – at the core of BlockFi’s mission in bridging crypto with traditional finance,” he said.
Yevgeniy Feldman, Vice President for Institutional Services at BlockFi also said the firm believes a trust structure for this product is beneficial for investors and will play a vital role in improving access in this nascent market. “The BlockFi Bitcoin Trust can more easily meet rapidly growing demands from the public to invest in digital assets, and our decision to custody the Trust’s holdings with Fidelity Digital Assets will help give shareholders peace-of-mind in the security of their investments,” Feldman added.
BlockFi now joins Bitwise and Osprey Funds in competing with Grayscale for a spot at the top in the bitcoin trust market. BlockFi again will also be competing against Grayscale on partnerships with institutionally trusted brands. Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.
The CEO of the lending firm however failed to disclose whether the shares would follow the footsteps of Grayscale and trade at a premium to the spot price of bitcoin. ETF research analyst at Bloomberg Intelligence, James Seyffart however revealed that, “there is little reason to think it wouldn’t because typically there are not enough shares in funds to meet the demand.”