Grayscale Set to Expand ETF Business as Legal Fight Against Spot Bitcoin Fund Continues

[ad_1]

Grayscale Investments is moving forward with its plan to transform itself into a major player in ETFs even as the company’s potential flagship fund remains blocked by regulators. The crypto-focused asset manager announced on Tuesday that it had set up the Grayscale Funds Trust to manage certain exchange-listed products, including ETFs, under its own roof under the rules of the Securities Act 1940. investment companies. Grayscale has also requested the creation of three new ETFs under the trust’s banner. “The formation of the Grayscale Funds Trust represents another significant milestone and one of those really important fundamentals that the company needs to continue to bring products to market,” Michael Sonnenshein, CEO of Grayscale, told CNBC. The expansion comes as Grayscale is embroiled in a lawsuit with the Securities and Exchange Commission over the company’s attempt to convert its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot bitcoin ETF. The SEC has repeatedly refused to approve spot Bitcoin products, citing concerns about manipulation of the underlying crypto market. Grayscale argued that the product should be allowed to launch in part because there are already Bitcoin futures ETFs in the market. The lawsuit is key to Grayscale’s future as GBTC has been trading at a deep discount for months, putting pressure on the company to allow takeovers. If the trust is converted to an ETF, the discount could be closed without significant withdrawals from the fund. The case was heard in the DC Circuit Court of Appeals in March and a decision is expected later this year. Sonnenshein said that while the move to ETFs is part of the larger business plan for Grayscale, the lawsuit and the creation of the new ETF trust are “separate and distinct” matters. Grayscale eventually plans to convert all of its digital asset trusts into US-listed ETFs, he added. One of the new ETFs Grayscale filed on Tuesday could be considered a substitute for a spot bitcoin fund. The Grayscale Global Bitcoin Composite ETF, which would have the “BTC” ticker when launched, would invest in cash bitcoin products outside the United States as well as stocks of bitcoin mining companies. Other potential funds are the Grayscale Ethereum Futures ETF (ETHG) and the Grayscale Privacy ETF (PRVC). The initial filings do not yet list the expense ratios for the fund. Registration of new ETFs is generally not effective until at least 75 days after their initial deposit, and some funds may never be launched. Grayscale already owns an ETF in the US market through the US Bank Series Trust. The Grayscale Future of Finance (GFOF) was launched last year and has only around $5 million in assets under management. Sonnenshein said Grayscale having its own trust will allow it more autonomy than working with a third party. After a sharp crypto selloff in 2022, the price of bitcoin and other digital currencies rebounded in 2023. Bitcoin was trading near $27,500 on Tuesday, up more than 60% for the year, but still down about $40,000 from its all-time high. .

[ad_2]