Grayscale proposes Bitcoin Mini Trust ETF, aims for lower fees

Grayscale is seeking the SEC’s approval for a Bitcoin Mini Trust to reduce its Bitcoin ETF fees.

The mini trust aims to offer a more cost-effective option to the company’s existing $28 billion GBTC spot Bitcoin ETF. The proposal, detailed in a recent SEC filing, outlines Grayscale’s strategy to fund this new offering by reallocating a portion of the shares from its GBTC ETF.

The introduction of the Grayscale Bitcoin Mini Trust aims to lower the aggregate fees for current GBTC investors, promising them a reduction in expenses without the burden of capital gains tax for transitioning to the new fund. The proposal is particularly significant given that avoiding capital gains tax has been a critical factor in keeping investors attached to the GBTC despite its higher fees than competitors.

While the specific fee structure for the new mini trust has yet to be announced, insiders suggest it will be in line with the lower end of the market, positioning it as a competitive alternative among existing Bitcoin ETF offerings.

The GBTC has maintained its dominance in the market, even converting from a closed-end fund to an ETF, despite its higher fee rate of 1.5%. The rate contrasts the lower fees offered by competitors such as Franklin Templeton Digital Holdings Trust (EZBC) and the Bitwise Bitcoin ETF (BITB), which charge 0.19% and 0.2%, respectively.

The launch of a standard and a mini version of an ETF within the industry is a well-established practice that aims to cater to a broader range of investor preferences and financial capabilities.

Despite a significant outflow of over $10 billion from the GBTC since the approval of several spot bitcoin ETFs earlier in the year, the value of the main fund has remained stable. This stability is attributed mainly to the bullish crypto market, which has offset the impact of these outflows.