Grayscale Unveils Revolutionary Bitcoin Mini-Trust with Unprecedented 0.15% Fee

Grayscale Bitcoin Trust (GBTC) announces plans to launch a new Bitcoin mini-trust with an unprecedented 0.15% fee, potentially undercutting the current lowest-cost spot Bitcoin ETF. This move follows significant outflows from GBTC due to its 1.5% fee, with investors seeking more cost-effective options. The new mini-trust offers tax-efficiency as the transfer would not be taxable, making it attractive for investors with unrealized gains. The trust will initially contribute 63,204 BTC and issue 692,370,100 shares to GBTC shareholders.

Grayscale Announces Groundbreaking Bitcoin Mini-Trust with 0.15% Fee

In a groundbreaking move that could revolutionize the Bitcoin exchange-traded fund (ETF) market, Grayscale Investments is planning to launch a new Bitcoin mini-trust with an unparalleled fee of just 0.15%, as reported by Coindesk on April 22, 2023.

Undercutting Competition with Lowest Fee

If brought to fruition, this new offering would significantly undercut the current lowest-cost spot Bitcoin ETF, the Franklin Bitcoin ETF (EZBC), which levies a fee of 0.19%, according to data from Coinglass.

Outflows Prompt Fee Reduction

This move comes in response to significant outflows from Grayscale's flagship Bitcoin Trust (GBTC), which has seen its Bitcoin holdings dwindle from 622,000 before the launch of the spot Bitcoin ETF on January 11, 2023, to approximately 300,000 as of April 19, 2023, as reported by Glassnode.

GBTC's High Fees Drive Outflows

The high 1.5% fee associated with GBTC, compared to lower fees offered by competing ETFs, has been a major factor contributing to the outflows.

Mini-Trust as Tax-Efficient Alternative

However, the proposed mini-trust could provide a tax-efficient solution for investors seeking to convert their holdings, as the transition would not be considered a taxable event, according to Coindesk.

Appealing to Investors with Unrealized Gains

This is particularly attractive for investors who have accumulated substantial unrealized gains due to GBTC's significant discount over the years, as shown by data from ycharts.

SEC Filing Reveals Details

An SEC filing indicates that Grayscale will contribute 63,204 BTC to the new BTC Trust, resulting in the issuance and distribution of 692,370,100 shares of the trust to GBTC shareholders.

Analyst Perspective

Bloomberg's senior ETF analyst Eric Balchunas notes that these financial projections are hypothetical and do not necessarily guarantee that the actual fee will be 0.15%.

Conclusion

Grayscale's plan to launch a Bitcoin mini-trust with an ultra-low fee represents a significant development in the Bitcoin ETF market. If successful, this offering could attract investors seeking a more cost-effective way to gain Bitcoin exposure, potentially leading to further outflows from GBTC and a shift in market dynamics.