Grayscale Plans Bitcoin ETF Spinoff

Grayscale’s new Bitcoin ETF will distribute shares to current GBTC shareholders in proportion to their current holdings in GBTC.

Grayscale, a crypto asset manager, disclosed its intention to convert a portion of its premier Bitcoin fund, Grayscale Bitcoin Trust (GBTC), into a new exchange-traded fund (ETF) on July 19.

Grayscale will contribute 10% of the spot Bitcoin held by GTBC to its new ETF, Grayscale Bitcoin Mini Trust (BTC), on July 31. According to the company, the ETF is scheduled to commence trading on the Arca exchange of the New York Stock Exchange (NYSE), subject to final regulatory approval.

Current shareholders of GBTC will obtain shares in the Mini Trust directly proportional to the number of shares they currently possess in GBTC. Due to the spinoff, depositors of GBTC will maintain the same quantity of spot BTC as they did previously, albeit across two distinct funds.

“From a value perspective — for example, a hypothetical individual who possesses $1,000 in ETHE or GBTC.” In a post on the X platform, Bloomberg ETF Analyst James Seyffart stated that the original fund should contain $900, and the new micro ETFs should include $100 after the spinoffs occur.

On July 8, Grayscale announced a comparable initiative with its Grayscale Ethereum Trust (ETHE) ETF. Existing ETHE shareholders will receive proportional distributions of shares in the new Grayscale Ethereum Mini Trust (ETH).

The spinoff was advantageous for current ETHE holders because the Mini Trust’s administration fees are significantly lower than those of ETHE. Fees for the Mini Trust are 0.15%, while ETHE charges 2.5%. Fees are determined as a percentage of the fund’s total assets under management.

Although Grayscale has not disclosed the management fees for the BTC Mini Trust, industry analysts anticipate that they will be significantly lower than those of GBTC, which currently imposes an annual management fee of 1.5% on investors.

Grayscale’s GBTC and ETHE funds, initially established in 2013 and 2017, are among the longest-running spot BTC and Ethereum funds in the United States. The assets of the GBTC fund exceed $17 billion.

According to an individual knowledgeable about the situation, the distribution would provide current shareholders with a tax-efficient method of transitioning from the legacy fund to the new ETF.