Grayscale considers tender offer for bitcoin trust

Grayscale considers tender offer for bitcoin trust

  • Bitcoin
  • December 20, 2022
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Grayscale Investments said it would consider a tender offer to return some capital to shareholders in its Grayscale Bitcoin Trust, or GBTC, if it is unable to convert the fund into an ETF.

Why it matters: Financial advisers and others in the industry are eager for a spot bitcoin ETF to be approved, as it would improve accessibility, cost and tax treatment.

Context: Over the summer, the Securities and Exchange Commission rejected Grayscale’s proposal for converting GBTC into a spot bitcoin ETF.

  • The investment firm subsequently sued the SEC, filing a petition with the U.S. Court of Appeals for the District of Columbia.

The latest: In a year-end letter to investors, Grayscale CEO Michael Sonnenshein said the company could offer a tender offer for up to 20% of the outstanding shares of GBTC.

  • That could happen if the company finds “there is no possibility of legislative or regulatory clarity that would allow for the conversion of GBTC to an ETF within a reasonable timeframe,” he wrote.

Yes, but: Even if Grayscale floats a tender offer, it would require relief from certain SEC requirements, and shareholder approval.

Of note: Because GBTC is a closed-end fund rather than an ETF, it currently trades at about a 45% discount to the spot price of bitcoin, based on YCharts data.

What’s next: Final written briefs in the SEC case are due on Feb. 3, after which time a three-judge panel will be selected to hear oral arguments in the case.

The big picture: The SEC has yet to approve a spot bitcoin ETF, rejecting proposals from numerous other firms, including VanEck, WisdomTree, Kryptoin, Valkyrie, First Trust/Skybridge, Fidelity, Stone Ridge/NYDIG, Ark Invest/21Shares, Global X, One River and Bitwise.

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