Crypto asset manager Valkyrie Investments wants to take on the role of being Grayscale Bitcoin Trust’s sponsor and manager.
In a Dec. 28 blog post, Valkyrie proposed several ways in which it would “improve upon the current management of GBTC.”
Valkyrie plans to lower the fund’s fees to 75 basis points, which would be significantly lower than the 200 basis points it currently charges.
The firm said it would facilitate redemptions at the prevailing Net Asset Value (NAV) through a Regulation M filing, a type of filing with the SEC designed to prevent manipulation. In this way, all investors would have the option to redeem their shares without delays. The firm would also attempt to offer redemptions in either Bitcoin or cash.
GBTC is the world’s largest Bitcoin fund, operated by Grayscale Investments which falls under the umbrella of crypto conglomerate Digital Currency Group. After FTX’s catastrophic implosion, DCG and its subsidiary Genesis were among those negatively impacted by the insolvency of yet another borrower.
On Nov. 16, Genesis’ crypto lending arm halted withdrawals and new loan originations citing unprecedented withdrawal requests. In a letter to shareholders a few days after, DCG CEO Barry Silbert claimed that the issues were caused by a mismatch of liquidity and duration of Genesis’ loan book. (On Unchained, Ran Ahluwalia of Lumida and Sam Andrew Crypto Clarify Research explain why they believe it is also an insolvency issue.)
As Genesis looked to raise fresh capital to address its liquidity issues, DCG maintained that Grayscale and GBTC would be unaffected by the process. In a blog post on Dec. 1, Grayscale assured investors that each GBTC share was backed by a proportionate amount of Bitcoin, with a document signed by its custodian Coinbase.
“We understand that Grayscale has played an important role in the development and growth of the bitcoin ecosystem with the launch of GBTC, and we respect the team and the work that they have done,” said Valkyrie in the blog post.
“However, in light of recent events involving Grayscale and its family of affiliated companies, it is time for a change,” they added.