By
Steve Muchoki
April 23rd, 2024
Looking at the strong demand for Bitcoin ETF from institutional players, Grayscale doesn’t want to lose its market dominance and is willing to navigate to the ETF market.
Grayscale Investments, the digital asset management giant with the world’s largest Bitcoin fund, made an important announcement on Monday, April 5. The Grayscale Bitcoin Trust (GBTC) manages nearly $35 billion in assets under management as of date. In a blog post, Grayscale added that it’s 100% committed to converting GBTC into a Bitcoin exchange-traded fund (ETF).
Grayscale further added:
“This is a subject that Grayscale has been examining closely from both a commercial and regulatory perspective for several years. While several firms have submitted Bitcoin ETF applications in the form of an S-1 or 19b-4 to the SEC, we are confident in our current positioning and engagement with the SEC”.
The latest announcement also comes as shares of GBTC have been trading at a steep discount for over a month. Also, GBTC has been one of the few options allowing institutions to gain exposure to Bitcoin through the stock market. However, as news of the first Bitcoin ETF for America gathers steam, institutional money is likely to move there.
So far, high institutional demand and limited options for BTC exposure helped GBTC to trade a premium. The recent discount in GBTC shares suggests that investors have been selling them off lately. Market analysts say that the Bitcoin ETF will charge much less than the 2% management fee that Grayscale charges. This is much higher than the cost of most actively managed funds and what most index ETFs charge.
With the rising competition in sight, it is but natural for Grayscale to change its business outlook to keep attracting institutional players further. Grayscale has said that they will reduce the management fee if they successfully convert GBTC to an ETF but didn’t disclose the exact number.
Grayscale to Join Bitcoin ETF Competition in the US
The demand for a Bitcoin ETF has been rising in America as more and more institutional players gain exposure to BTC. Also, this is not the first time that Grayscale has been applying for a Bitcoin ETF with the US SEC. The digital asset manager submitted their first application back in 2016. For most of 2017, it had some discussions with the securities regulator.
“Ultimately, we withdrew our application because we believed the regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market,” they added.
There have been a number of Bitcoin ETF filings recently from some of America’s biggest financial players. It is highly expected that we get at least one Bitcoin ETF approved by the SEC ahead of this year. Let’s see who gets the first nod.