Michael Sonnenshein, the CEO of Grayscale Investments, categorically states that their ultimate preference lies in converting the GBTC to an ETF. Furthermore, this conversion is done for the benefit of the concerned investors. However, Grayscale Investments is also considering launching a tender offer for the GBTC shares. However, this is just in case a court does not allow the company’s intentions to convert the world’s biggest publicly traded crypto fund into an ETF.
As it presently stands, the Grayscale Bitcoin Trust has a holding of nearly $11 billion in the form of Bitcoin. However, the value of the shares is way below the value of the bitcoin they stand for. In this case scenario, the market capitalization is $5.6 billion. However, the trust’s legal format prevents investors from redeeming their shares for the fundamental bitcoin.
Earlier this year, the U.S. Securities and Exchange Commission declined the application made out by Grayscale regarding the conversion of the trust into an exchange-traded fund (ETF). However, it could not understand how investors would remain safe from fraudulent activities. In retaliation, Grayscale Investments filed a counter-lawsuit against the SEC. The matter presently is sub-judice. However, in the case of all legal options being denied to the entity, it will pursue the line of scoring ways and means of being able to return a certain amount of the GBTCs capital to the concerned shareholders.
However, last year, an investment management firm, Marlton LLC, sent an open letter to Grayscale offering a tender. In their expert opinion, this would be beneficial in lessening the discount to NAV, providing the stakeholders’ faith in the sponsor’s capability of properly managing the fund’s discount. However, suppose the scenario is not in favor of Grayscale. In that case, it will keep operating GBTC without the help of any redemption program till it can successfully convert it to a spot bitcoin ETF.