May 29, 2024
Grayscale's Move Toward Bitcoin ETF Competitiveness
Bitcoin News

Grayscale’s Overhaul Plan: GBTC Prepping for Bitcoin ETF Transition

Grayscale, the overseer of the Grayscale Bitcoin Trust (GBTC), disclosed an adjustment to the trust’s agreement, marking the first revision since 2018, as per a filing made on Wednesday. The objective is to streamline GBTC’s framework in anticipation of its transition to a spot bitcoin exchange-traded fund (ETF), aiming to create an equitable ground with other contenders like the colossal asset management firm, BlackRock.

The proposed modifications to the trust agreement, slated for a shareholder vote, involve two key changes. The first alteration permits the transformation of monthly fees, previously collected by Grayscale, to be payable on a daily basis. This adjustment is a structural refinement and does not entail any fee reduction, clarified a company spokeswoman, acknowledging Grayscale’s commitment to such reductions, which are yet to be finalized.

Presently, Grayscale imposes a 2% management fee for GBTC, while firms awaiting approval for spot bitcoin ETFs typically fall within the range of 0.7% to 1%, as per an analyst report by Matrixport.

The second revision enables the pooling of assets in an omnibus account style, facilitating a more seamless creation and redemption of shares—the fundamental mechanism of the ETF. This enhancement aligns with Coinbase Custody’s service, where the BlackRock iShares product, among other spot ETF applicants, will also leverage its capabilities.

Analysts foresee the U.S. Securities and Exchange Commission (SEC) potentially approving multiple-spot bitcoin (BTC) ETFs in rapid succession. This intensifies the competitive atmosphere among applicants, given the anticipated advantage for the first-approved ETF in attracting a substantial portion of everyday investors.

Notably, the amendments proposed will not incur additional costs for Grayscale shareholders, nor are they indispensable for the conversion to an ETF, as per the filing. Shareholders have a 20-day window from the filing date to cast their votes on these proposed updates.

Image by freepik

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