Grayscale Weighing In Returning 20% of GBTC Assets to Investors Should ETF Dreams Failing

The Grayscale Bitcoin Trust is considering a tender offer that would aim to return investor capital if the SEC keeps blocking its conversion to a spot ETF.Author:BtcCaseyPublish date:Dec 19, 2022The Grayscale Bitcoin Trust is considering a tender offer that would aim to return investor capital if the SEC keeps blocking its conversion to a spot ETF.Grayscale CEO Michael Sonnenshein stated in a letter to investors that should the Grayscale Bitcoin Trust fail to convert into an exchange-traded fund (ETF), potential moves could include a tender offer of 20% of the $10.7 billion trust. Tender offers would allow shareholders to sell their shares at a time that suits them, effectively returning the investment. Grayscale’s Bitcoin Trust was originally designed to trade as a proxy for bitcoin. It sought ETF status. This meant that it would receive a net asset valuation (NAV) discount, or premium. The difference between the trust’s shares and the underlying bitcoin is called a premium or discount. It is a premium if the trust shares are worth more than the underlying Bitcoin. It is considered a discount if the shares’ value falls below the underlying Bitcoin. As the trust’s value continues to decline, investors have had to think about their options. This has led to a 50% discount, which is a record low and fueled investor anxiety. There is no way to get bitcoin out of the trust. Grayscale has been trying to obtain ETF status for some time. Recently, after being denied, Grayscale filed a lawsuit against U.S. Securities and Exchange Commission. Grayscale’s senior legal strategist, Donald B. Verrilli Jr., a former U.S. solicitor-general, claimed that the SEC is not applying consistent treatment to similar investment vehicles and is acting arbitrarily, capriciously, in violation of the Administrative Procedure Act, and Securities Exchange Act of 1934. “Despite repeatedly denials by the SEC of a spot ETF it has approved multiple futures-etfs, beginning with the ProShares BITO in October 2021. Chairman Gary Gensler explains that futures have “Bitcoin Futures have been monitored by sibling agency CFTC since 2004. This is protected by the 1940 Act. “Tagsterms:GrayscaleGbtcGrayscale Bitcoin TrustETF

 

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