The firm submitted the application to the US Securities and Exchange Commission on March 12.
The Grayscale Bitcoin Mini Trust is expected to have a competitive fee and will come from a spinoff from GBTC commented ETF analyst James Seyffart.
He added that GBTC holders will get some percentage of their holdings spun off into the new fund.
Grayscale Mini Bitcoin Fund
The fee for the new fund was not disclosed, neither was the percentage of GBTC that will be spun off, “but pretty sure this will be a non-taxable event for a chunk of those shares to get into a cheaper and cost-competitive product,” said Seyffart.
It’s happening! @Grayscale just filed to launch the “Grayscale Bitcoin Mini Trust” expecting this to have a competitive fee. It will trade under the ticker $BTC and will come from a spinoff from $GBTC. This means $GBTC holders will get some % of holdings spun off into $BTC. pic.twitter.com/JAKMcKfn5o
— James Seyffart (@JSeyff) March 12, 2024
Grayscale currently charges an annual management fee of 1.50%, which is considerably higher than the newly launched spot Bitcoin ETFs.
Competitors such as BlackRock and Fidelity, which have seen huge trading volumes, are charging 0.25% or less, and VanEck announced it was temporarily cutting fees to 0% this week.
“Grayscale knows that its current investors are not thrilled with the fees that they’re being charged, and so this is a way to throw them a bone,” said Eric Balchunas, Bloomberg’s senior ETF analyst.
Capital gains taxes are the primary reason that remaining GBTC shareholders have refrained from withdrawing their money.
However, Grayscale has seen a massive outflow of more than $11 billion, or around 231,000 BTC, since it converted to a spot ETF in January.
Balchunas thinks the new product may help stem the outflow and give them a shot at some inflows. “It’s still going to be difficult for the Bitcoin Mini Trust to get new flows, but I think they have much more of a fighting chance now – especially for their network of clients,” he told Fortune.
No Fee Reduction for GBTC
James Seyffart added that they could reduce fees on the GBTC fund, but that would result in a major hit to company revenue.
“First impression is that it’s a nice middle ground between helping out customers and not decimating their revenue,” he said.
Grayscale CEO Michael Sonnenshein stated that the prospectus is not complete and may be changed. “We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective,” he added.
GM. Today we’ve filed for @Grayscale #Bitcoin Mini Trust – Ticker: $BTC
Important Disclosure: the information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange… pic.twitter.com/qz8j8rlY7p
— Sonnenshein (@Sonnenshein) March 12, 2024
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