Home Mutual Funds Grayscale Wants To Launch ‘Mini’ Bitcoin Fund Amid GBTC Outflows

Grayscale Wants To Launch ‘Mini’ Bitcoin Fund Amid GBTC Outflows

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Key Takeaways

  • Grayscale Investments has filed for a new spot bitcoin exchange-traded fund (ETF) with the SEC.
  • Grayscale offers the largest spot bitcoin ETF in terms of assets under management, GBTC, but has experienced more than $10 billion in outflows since its conversion to an ETF.
  • These outflows may be linked to GBTC’s high fees compared with the other nine spot bitcoin ETFs, and Grayscale’s new offering is intended to come with more competitive rates.
  • Up to this point, Blackrock’s IBIT spot bitcoin ETF has been a key beneficiary of GBTC’s high fees-driven outflows, growing to nearly $15 billion in size in roughly two months.

Cryptocurrency asset manager Grayscale Investments wants to launch a second, more affordable spot bitcoin exchange-traded fund (ETF) with a fee rate much lower than its Grayscale Bitcoin Trust ETF (GBTC), according to a filing with the U.S. Securities and Exchange Commission (SEC).

Grayscale’s GBTC has experienced more than $10 billion in outflows, despite major optimism and massive inflows for other spot bitcoin ETFs that started trading in January this year.

According to Bloomberg Senior ETF Analyst Eric Balchunas, these outflows are mainly caused by GBTC’s high fees when compared with the other nine spot bitcoin ETFs currently on the market.

What Will Grayscale’s Mini Bitcoin ETF Offer?

Grayscale wants to offer a new spot bitcoin ETF called the Bitcoin Mini Trust (BTC), with as-yet-undisclosed but certainly lower fees than the 1.5% currently charged by the existing GBTC fund.

In a first for commodity ETFs, Grayscale also plans for the new fund to be a “spinoff” of GBTC, meaning that it some of the bitcoin backing the existing fund will be used to seed the new ETF.

The asset manager says that move would be beneficial for existing GBTC investors as they will “benefit from a lower blended fee with the same exposure to Bitcoin, spanning ownership of shares of both GBTC and BTC.”

Another big advantage touted by Grayscale is the ability for GBTC shareholders to acquire shares of the new ETF without a taxable event. Remember, selling your bitcoin for profit or even exchanging your bitcoin for goods or services may trigger a tax liability.

Recently, the combined assets under management (AUM) of the other nine spot bitcoin ETFs surpassed GBTC’s assets. Blackrock’s iShares Bitcoin Trust (IBIT) has been particularly successful, growing to a size of about $14 billion by the end of trading on Monday.

The hype surrounding spot bitcoin ETFs has brought bitcoin (BTC) itself to new all-time highs above $72,000 this week, after falling below $20,000 in the aftermath of crypto exchange FTX’s collapse in November 2022.

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