Grayscale Investments Plans to Spin Off 10% of Its Grayscale Bitcoin Trust (GBTC) into a New ETF

Crypto asset manager Grayscale Investments announced its plan to create a new exchange-traded fund (ETF) by spinning off 10% of its Grayscale Bitcoin Trust (GBTC).

Grayscale is spinning off 10% of its Grayscale Bitcoin Trust (GBTC) to create a new exchange-traded fund (ETF) that will begin trading on the NYSE Arca exchange by July 31, pending regulatory approval.

The new fund, called the Grayscale Bitcoin Mini Trust (BTC), will receive a portion of the Bitcoin currently held by GBTC. According to the announcement, existing GBTC shareholders will receive shares in the Mini Trust in proportion to their holdings, ensuring that their overall Bitcoin exposure is maintained through both funds.

This move follows a similar strategy that Grayscale employed earlier this month with its Ethereum Trust, which saw the creation of the Grayscale Ethereum Mini Trust (ETH).

According to Bloomberg ETF Analyst James Seyffart, the management fees for the Bitcoin Mini Trust are likely to be significantly lower than the current 1.5% annual fee for GBTC. This expectation is based on the lower fee of 0.15% for the new Ethereum Mini Trust compared to its predecessor's fee of 2.5%.

In a recent thread on Twitter, Seyffart further explained the potential impact on investors, stating that "from a value point of view — say a theoretical person has $1,000 in ETHE or GBTC. After the spinoffs occur, it should essentially be $900 in the original fund and $100 in the new mini ETFs." This highlights how the spin-off aims to maintain an investor's exposure while presenting the possibility of reducing their fee costs.

GBTC is one of the longest-running spot Bitcoin funds in the U.S., having been launched in 2013. It currently has over $17 billion in assets under management. Its Ethereum counterpart was launched in 2017.

The announcement of the Grayscale Bitcoin Mini Trust comes amid increasing demand for Bitcoin ETFs in the U.S. Several applications have been filed with the Securities and Exchange Commission (SEC), and two physical Bitcoin ETFs are already available in Canada. However, the SEC has yet to approve a spot Bitcoin ETF in the U.S.

If approved, the Grayscale Bitcoin Mini Trust would join a growing lineup of cryptocurrency-related ETFs in the U.S. These include ProShares Bitcoin Strategy ETF (BITO), VanEck Bitcoin Strategy ETF (XBT), Valkyrie Bitcoin Strategy ETF (BTF), and several ETFs that provide exposure to crypto miners and blockchain technology.

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