Grayscale, known for offering the most expensive spot bitcoin ETF, has announced its plan for a spinoff version of the fund. The new version will have a fee of 0.15%, making it the cheapest on the market according to the company’s pro forma financials in their latest submission.
The existing Grayscale Bitcoin Trust (GBTC) currently charges a 1.5% fee. Upon the introduction of the low-fee Grayscale Bitcoin Mini Trust (BTC), the filing specifies that the company will transfer 10% of the GBTC assets to the BTC Trust. The BTC trust shares will then be automatically issued and distributed to existing GBTC shareholders. The pro forma financial statements are predictions of probable expenses and revenues based on the company’s past experiences and future endeavors.
The aim of Grayscale’s Bitcoin Mini Trust is to provide current GBTC investors a lower fee alternative that is on par with other bitcoin ETFs approved earlier in January. As it stands, the lowest-cost spot bitcoin ETF is Franklin Bitcoin ETF (EZBC) at 0.19%.
Furthermore, it should be noted that Grayscale’s plan of spinning off is seen as a non-taxable event for existing GBTC shareholders. Therefore, these investors will not face any capital-gains tax when automatically transferred into the new fund. This is particularly significant for early GBTC investors who, owing to thousands of percentage gains, would otherwise face a substantial taxable event when switching to a competitor product offering lower fees.
GBTC from Grayscale was first introduced more than ten years ago, initially being offered via private placement. Public trading of the shares on an over-the-counter basis kicked off around the mid of 2015. This mode of operation lasted up until January 2024 when GBTC ascended to NYSE Arca as a bitcoin spot ETF. This move came with added competition from a collection of firms including giants like BlackRock and Fidelity.
The contemporary assets under management by Grayscale total around $19.6 billion. The closest competitor to this figure is the IBIT fund from BlackRock which has seen growth up to just a little over $17.5 billion.
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