Grayscale Investments submitted a new filing with the US Securities and Exchange Commission (SEC) on Monday to launch the Grayscale Bitcoin Mini Trust, a spin-off fund of its Grayscale Bitcoin Trust (GBTC).
In its filing, Grayscale describes the Bitcoin Mini Trust as a spin-off from the company’s existing Grayscale Bitcoin Trust (GBTC). While fees have not been disclosed, sources familiar with the matter have suggested the move is in part designed to offer a lower-cost alternative to its flagship product. Further, the distribution will not trigger a capital gains tax event, adding further benefit to current GBTC investors.
Grayscale has been a pioneer in institutional access to digital asset investment since it launched GBTC as a closed-end fund in 2013. However, its flagship offering, which it converted to an exchange-traded fund in January, has suffered from its high 1.5% fee, especially since the SEC’s approval of several spot Bitcoin ETF applications has introduced new competitors to the field.
Read more: There Are Now 11 Spot Bitcoin ETFs. Here’s the One That’s Best for You
Launching a spin-off involves creating a new, independent company through the sale or distribution of new shares of an existing parent company. Shareholders of the parent company – in this case, GBTC – receive shares of the new entity, which allows the parent company to offload specific assets, operations, or interests into a separate entity while rewarding shareholders.
Analyst Reaction
Bloomberg analyst James Seyffart commented on the development on Tuesday on X, writing: “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 spin-off from $GBTC. This means $GBTC holders will get some % of holdings spun off into $BTC,” Seyffart tweeted, emphasizing the potential benefits for current GBTC shareholders.
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
Although Seyffart noted that specific details such as the fee structure and the exact percentage of GBTC holdings that will transition into the new $BTC shares have yet to be disclosed, he commented generally on the language of the filing:
“Here’s the language around the spinoff. There is no fee disclosed yet orrr [sic] what % of $GBTC will spin 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,” he added, suggesting possible tax advantages such a move could mean for investors.
GBTC currently has over $28 billion in assets but has experienced outflows of more than $11 billion since converting into an ETF, according to BitMEX Research.
Previous Speculation
Seyffart has previously speculated on Grayscale’s strategic moves in the ETF space. In March 2021, he suggested that Grayscale might launch a “mini, cheaper ETF version of $GBTC and convert $GBTC later,” a prediction that has seemingly come to fruition with the filing for the Grayscale Bitcoin Mini Trust. “And I got it right that this is what they’d use the $BTC ticker for,” Seyffart noted, referencing a January 8 tweet anticipating Grayscale’s strategic use of the $BTC ticker for a newer product.
The launch of the Grayscale Bitcoin Mini Trust is part of a broader trend of bitcoin ETF product offerings, which has coincided with a notable bull run in the cryptocurrency market that has seen bitcoin reach a new all-time high of 72,733 on Tuesday morning. Proponents have argued that the approval and proliferation of bitcoin ETFs have been a significant factor in broadening investor access to bitcoin, offering access to the digital currency through traditional, clearly regulated investment vehicles.