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As per its recent filing on Wednesday, November 29, asset manager Grayscale has made a few amendments to the agreement of its Grayscale Bitcoin Trust (GBTC) for the very first time since 2018. This will typically help Grayscale to prepare for the launch of its Bitcoin ETF and compete with other players.
Grayscale Pushing for a spot Bitcoin ETF
The goal is to enhance the structure of GBTC in preparation for a potential transition to a spot Bitcoin exchange-traded fund (ETF) and to ensure fair competition with other applicants, including the prominent asset management firm BlackRock.
The proposed changes to the GBTC update, subject to shareholder approval, encompass two key modifications to the trust agreement. Also, this development comes within six days of Grayscale updating its Bitcoin ETF filing.
Of the two proposed modifications, the initial modification permits fees from the previous monthly collection to a daily basis. This adjustment is a structural refinement and does not constitute a reduction in fees, a commitment Grayscale has made, though it has not been finalized, according to a company spokesperson.
Currently, Grayscale imposes a 2% management fee for GBTC, while firms awaiting approval for spot Bitcoin ETFs typically fall within the 0.7%-1% range, as outlined in an analyst report by Matrixport.
The second update allows for the mingling of assets in an omnibus account format, streamlining the creation and redemption of shares, which serves as the fundamental processing mechanism for the ETF. This innovative approach is part of Coinbase Custody’s service. Notably, the BlackRock iShares product and several other spot ETF applicants will also leverage Coinbase Custody.
Implementing the Amendments
Grayscale will implement the proposed amendments without any additional expenses for its shareholders. Additionally, they are not mandatory for the conversion to an ETF, according to the filing. Shareholders have a 20-day window, starting from the filing date on Wednesday, to cast their votes on these proposed updates. In an email to coinDesk, a Grayscale spokeswoman said:
“Today, Grayscale has outlined proposed amendments to GBTC’s Trust Agreement that are intended to provide operational efficiencies that we believe are beneficial to both Grayscale and GBTC. Importantly, this is in our normal course of business, and GBTC remains ready to uplist as a spot Bitcoin ETF to NYSE Arca upon appropriate regulatory approvals.”
Amid all the developments with Bitcoin ETF, the GBTC share price has rallied significantly, up by 278% in 2023. This has further helped to narrow the discount of GBTC and the spot BTC price to the lowest in two years.
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