Grayscale CEO confirms takeover bid if Bitcoin ETF path fails

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Grayscale Investments will seek to return 20% of the Grayscale Bitcoin Trust (GBTC) fund to investors if its bid to have a spot Bitcoin ETF fails.

The company will explore this option if its battle to get the Securities and Exchange Commission (SEC) to approve its application to convert GBTC to spot bitcoin ETF fails. That’s the message Grayscale CEO Michael Sonnenshein gave investors via a year-end letter on Monday.

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The SEC rejected Grayscale’s proposal to convert GBTC into an ETF as early as this year, as the regulator’s actions saw the investment firm take legal action.

On Monday, Sonnenshein said the company is 100% committed to pushing for approval, noting that remains a path that would best benefit investors. On what happens next if the company loses the legal challenge against the SEC, Grayscale’s CEO noted:

“We remain confident that the DC Court of Appeals will agree with our strong, common sense and compelling legal arguments, but we also appreciate investors’ interest in what will happen to GBTC if the courts do not rule. in our favor.”

Grayscale will not dissolve GBTC

Grayscale will consider a takeover bid to return a percentage of GBTC’s capital to shareholders, he added. However, this route is an option if the asset manager exhausts all options in applicable courts, as well as determines that there are no other openings with respect to possible legislative and regulatory avenues.

According to Sonnenshein, the takeover bid would be for 20% of GBTC’s outstanding shares. To achieve this, Grayscale will need SEC approval for certain relief, as well as shareholder approval. The firm does not plan to dissolve GBTC even if it fails in its quest for a takeover bid.

GBTC is trading at a huge discount to net asset value (NAV), currently at 49% as the company manages solvency issues around parent company Digital Currency Group.

Grayscale’s exposure to struggling crypto broker Genesis Global has also been a massive source of nervousness, with the crypto fearing that a GBTC unwind would have a massive impact on Bitcoin’s price.

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