Grayscale files to introduce a low-fee version of its ETF

Grayscale, the company behind GBTC spot Bitcoin ETF, has filed with the US Securities and Exchange Commission to introduce a mini version of its ETF. The relatively low-fee product will be created from a spin-off of a percentage of GBTC shares.

The mini version of the $28 billion GBTC ETF will be named the Grayscale Bitcoin Mini Trust. The product will trade under the ticker “BTC,” with the new shares distributed to GBTC shareholders, while GBTC will contribute a certain amount of Bitcoin to the fund. The mini-trust will operate independently from GBTC and trade on the New York Stock Exchange.

If the SEC approves the mini-trust, existing GBTC investors are expected to benefit from lower blended fees. They will also not pay any capital gains tax for transferring into the new fund. The filing reads in part:

No consent, authorization, approval or proxy is being sought from GBTC Shareholders in connection with the Spin-Off, and GBTC Shareholders will not need to pay any consideration, exchange or surrender existing GBTC Shares or take any other action to receive Shares of the Trust on the Distribution Date.

Grayscale spot ETF’s 1.5% fee is higher than rivals

The decision to create the Grayscale Bitcoin Mini Trust could have been informed by a deterrent 1.5% fee charged on GBTC spot Bitcoin ETF. This compares unfavourably to rivals such as Bitwise Bitcoin ETF (BITB), which charges 0.2%, while Franklin Templeton Digital Holdings Trust (EZBC) costs only 0.19%.

Since approval, Grayscale’s spot ETF has faced outflows, compared to rivals, which has seen net positive inflows. The fund has witnessed over $10 billion in outflows, although it has been able to retain the original asset value due to skyrocketing cryptocurrency prices. Consequently, the decision to create a mini-trust might be informed by the need to make its ETF product attractive to firms seeking to give their clients exposure to spot Bitcoin ETF products.

Grayscale has not disclosed how many shares will be distributed during the spin-off. The latest filing shows the fund plans to file a 14C form describing the terms and conditions of the spin-off.

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