Grayscale Prepares for First GBTC Filing Amendment Since 2018
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Crypto-backed asset management firm Grayscale has formally alluded to a filing update for its Grayscale Bitcoin Trust (GBTC).
Fees, Custodying Changes for Operational Efficiencies
Grayscale has not made any amendments since its first notification with the US Securities and Exchange Commission (SEC) for a GBTC product in 2018.
Grayscale Gears Up for Spot Bitcoin ETF, Updating Trust Agreement for Sake of 'Operational Efficiencies'.
On November 29, 2023, Grayscale Investments, the world's largest digital asset manager, announced that it is proposing to amend the trust agreement of its Grayscale…
— Whiskers Bunguna ETH (@whiskersbunguna) November 30, 2023
As a result, the firm has stated that its filing focuses on “operational efficiencies” in two key areas: the fee structure and the crypto custodial platform it intends to collaborate with.
Regarding fees, Grayscale informed shareholders that the proposed update would shift from the previous monthly payment structure to a daily pay-as-you-go model.
While this system introduces a new payment frequency, it does not impact the total fees paid by GBTC shareholders. Grayscale currently imposes a 2% management fee, and although the company commits to reviewing it to align with industry peers, no specific timeline for this adjustment is provided.
On the other hand, the second proposal will allow users’ assets to be combined in an omnibus account manner to facilitate the creation and rapid redemption of GBTC shares.
Providing more details on this second update, Grayscale revealed that commingling users’ assets will allow the Trust to leverage the expertise of its prime broker. This would then make it easier and more efficient for users to access their liquidity in a timely manner.
Furthermore, the omnibus account proposal involves temporarily combining the Trust’s assets with those of other individuals and unnamed entities for a short period to expedite share redemption, according to Grayscale.
The company stated that shareholders have 20 days from the filing date to cast their votes. Shareholders can either vote by mail or with other methods listed on the prospectus’ written consent.
The crypto management firm also stated that US-based Bitcoin exchange Coinbase will play the role of its custodian for its Bitcoin assets in the event approval is eventually secured from the SEC.
Coinbase Custody, the Pathway For Crypto Custodying
In the past three months, Coinbase Custody has experienced a rapid expansion of its clientele, attracting notable players in traditional finance such as BlackRock, Valkyrie, WisdomTree, Ark Invest, and others.
These entities have chosen Coinbase for the surveillance and custody of their Bitcoin assets, as they all vie for a spot Bitcoin ETF approval from the securities agency.
The platform’s expertise has been chosen against other exchanges like Binance due to its long-standing regulatory purity and its stock listing on the Nasdaq trading floor.
Capturing this strong trend, CryptoQuant data showed that a large swath of Bitcoin reserves is making a cross-platform trip from Binance to Coinbase since the former’s regulatory struggles in the US.
According to CryptoQuant, Binance’s Bitcoin reserves have shrunk to 5,000 BTCs, while Coinbase’s reserves have rapidly climbed to 12,000 BTCs within a very short period.
$BTC moving from Binance to Coinbase
"Coinbase's reserves have since increased by around 12,000 BTC while Binance's have decreased by 5,000 BTC."
— CryptoQuant.com (@cryptoquant_com) November 23, 2023
This trend is based on growing confidence that the SEC would likely approve a series of spot Bitcoin ETFs in the early days of 2024.
According to Bloomberg’s James Seyffart, the approval window has climbed to 90% in the last three months, with the expected date set for January 2024.
Bloomberg analysts, Eric Balchunas and James Seyffart predicted in a note yesterday, that a spot #Bitcoin ETF has a 90% chance of approval by January 2024 🚀
Are you ready for it? pic.twitter.com/JICT0ov6xt
— Lior (Lee-or) (@liorsela) October 13, 2023
Meanwhile, the tides have rapidly changed in the last couple of days following Binance’s enforcement action.
Binance uncertainty out of the way, its activities will now be monitored by an independent compliance monitor.
=> Much higher ETF approval odds
Waiting for the market to agree with me that this is actually bullish. https://t.co/OzReCqeOkP
— Alex Krüger (@krugermacro) November 22, 2023
According to a crypto trader on X (formerly Twitter), the chances of a Bitcoin spot ETF approval is even higher, given the resolution of Binance’s legal issues.