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Grayscale Updates GBTC Agreement in Preparation for Spot-BTC ETF Conversion 

2 mins
Updated by Kyle Baird
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In Brief

  • Grayscale, the world's largest crypto asset management firm, prepares to convert its GBTC fund into a spot Bitcoin ETF and amends its agreement.
  • The firm seeks shareholder approval for two main amendments: changing the fund fee payment frequency and allowing temporary holding of assets in omnibus accounts.
  • Grayscale believes these changes may provide operational efficiencies for a potential GBTC spot ETF conversion.
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The world’s largest crypto asset management company, Grayscale, is preparing for the conversion of its GBTC fund to a spot Bitcoin exchange-traded fund (ETF). It has amended its agreement for the fund for the first time in five years.

On November 29, Grayscale filed a consent solicitation statement seeking shareholder approval to amend the trust agreement governing the Grayscale Bitcoin Trust (GBTC).

Grayscale Preps For Bitcoin ETF 

Furthermore, it is the first time the company has updated the trust agreement since 2018. The aim is to optimize the fund’s structure for an anticipated “uplisting” to a spot Bitcoin ETF

There are two main amendments to the agreement, according to the filing. The first proposal would change how frequently the fund fees are paid from monthly to daily. However, the firm would maintain discretion on the timing of payment. This would not change the fee amount, only the payment frequency.

Grayscale currently charges a 2% management fee for GBTC. Firms awaiting approval for spot Bitcoin ETF products have fees ranging from 0.7% to 1%.

The second proposal would allow some trust assets to be temporarily held in omnibus accounts to facilitate more efficient creation/redemption of shares. This could result in some commingling with third-party assets and comprises part of Coinbase Custody’s service.

Grayscale recommended shareholders vote in approval of both proposals. The changes are not prerequisites for a potential GBTC spot ETF conversion but may provide operational efficiencies.

It noted that risks include potentially increased costs and burdens from more frequent fee payments. Moreover, there are marginal risks related to asset commingling if held in omnibus accounts. However, most assets would still be held in segregated custody accounts.

A Grayscale spokesperson said, “This is in our normal course of business, and GBTC remains ready to uplist as a spot Bitcoin ETF to NYSE Arca upon appropriate regulatory approvals.”

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach

Exchange Traded Fund Latest 

On November 30, senior Bloomberg ETF analyst Eric Balchunas reported that BlackRock had another meeting with the SEC’s Trading and Markets division. The firm presented a revised in-kind model relating to redemption flow. 

Revised in-kind redemption model. Source: X/@EricBalchunas
Revised in-kind redemption model. Source: X/@EricBalchunas

SEC’s Trading and Markets division is responsible for approving or denying ETF applications. On November 29, SEC Chair Gary Gensler posted another of his “educational” videos explaining what the department does. 

Bloomberg ETF analyst James Seyffart commented

“The Division of Trading & Markets explained in this video from Gensler is the division that has ultimately denied every spot Bitcoin ETF Application in the past. This division would write any potential approval orders.” 

The latest company to file an application for a spot Bitcoin ETF was Pando on November 29. Furthermore, analyst have maintained their predictions of a 90% approval probability in January.

Top crypto platforms in the US | February 2024



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Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...