 | Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here! |
(Kitco News) - Grayscale Investments, the world’s largest digital currency asset manager, remains dedicated to launching a spot Bitcoin (BTC) exchange-traded fund (ETF) in the U.S. and has opted to take a different approach than simply filing an application with the Securities and Exchange Commission (SEC) with the formation of Grayscale Funds Trust.
The asset manager announced the trust on Tuesday, registering the new arm as a Delaware statutory trust structure that will allow Grayscale to “independently manage its 1940 Act products as the firm continues to build out its ETF franchise.”
“Today’s filing demonstrates our continued commitment to offering investors innovative ways to access the digital economy and transformative technologies using a familiar, trusted, regulated investment vehicle: the ETF,” said David LaValle, head of ETFs at Grayscale Global.
To go along with the creation of Grayscale Funds Trust, the firm also filed a registration statement on Form N-1A with the Securities and Exchange Commission (SEC) for Grayscale Ethereum Futures ETF, Grayscale Global Bitcoin Composite ETF, and Grayscale Privacy ETF, each a series of Grayscale Funds Trust.
According to the registration statement, the fund will not invest in digital assets directly but may offer “indirect exposure to digital assets by virtue of its investments in companies and exchange-traded vehicles that use one or more digital assets as part of their business activities or that hold digital assets as investments.”
Grayscale added that the fund will not invest in initial coin offerings (ICOs) and highlighted that “because the Fund will not invest directly in any digital assets, it may not track price movements of any digital assets.”
The fund will strive to invest at least 80% of its net assets “in the securities that comprise the Index and in investments that have economic characteristics that are substantially identical to the component securities of the Index,” Grayscale said.
Securities included in the Index will “generally consist of” exchange-traded products (ETP), notes and other pooled investment vehicles that hold or are backed by physical Bitcoin and “meet certain asset and liquidity thresholds,” and Bitcoin mining companies that “generate a significant portion of their revenue from Bitcoin mining activities or mining related hardware, software, services, and or projects.”
Bitcoin ETPs will need to meet minimum assets under management and liquidity factors to be included in the Index. Bitcoin mining companies will be selected based on their level of mining activity and the revenue generated from those activities, in addition to certain market capitalization and liquidity thresholds.
The Index will be reconstituted and rebalanced on a quarterly basis, effective on the last trading day of March, June, September and December. Grayscale Advisors, LLC, an SEC-registered investment advisor previously formed by Grayscale, will serve as an investment advisor to the ETFs issued by the new trust.
“The creation of Grayscale Funds Trust reflects our dedication to scaling Grayscale’s business responsibly,” said Grayscale CEO Michael Sonnenshein. “We are putting the necessary foundations in place so Grayscale can continue creating and managing regulated, future-forward products.”
|
| Grayscale slams SEC refusal to approve Bitcoin ETF as illogical, arbitrary, and discriminatory |
This new fund from Grayscale comes as the firm explores different approaches to getting a spot Bitcoin ETF approved in the U.S., a move the SEC has thus far been reluctant to make. To date, the regulator has rejected more than a dozen spot Bitcoin ETFs, including those filed by SkyBridge, Grayscale, WisdomTree and ARK 21Shares.
Grayscale is also motivated to launch spot ETFs, in part, due to the struggles of its cryptocurrency trust products, which have traded at negative premiums ranging from -25% to -62% for certain trusts over the past year.
This latest launch by Grayscale also shows that firms remain committed to bringing a spot BTC ETF to market. On Tuesday, Cboe Global Markets announced that it filed a proposal with the SEC to list and trade shares of the ARK 21Shares Bitcoin ETF, a spot bitcoin ETF by Cathie Wood's Ark Invest and crypto investment product firm 21Shares, on the Cboe BZX exchange. This is the third time that the Cboe has filed for the approval of a spot Bitcoin ETF with the SEC.
