Grayscale Investments Files for Bitcoin Fund and Hopes to Attract Institutional Investors
The digital currency asset manager Graysale is looking to bring in the government in order to appeal to institutional investors.
The company based in New York and the largest in the crypto asset management sector, has made an announcement on Tuesday, saying that it willingly filed a registration for its Bitcoin (BTC) trust fund (GBTC) with the Securities and Exchange Commission (SEC). Initially, GBTC has been offered in 2013 as a private placement so that an exemption from the SEC registration to be obtained. In 2015, it got approved for public trading by the Financial Industry Regulatory Authority (FINRA).
GBTC to be Registered as an SEC Reporting Company
The Form 10 of Grayscale’s filing has been submitted Tuesday and is looking to have GBTC registered as an SEC reporting company. This would be a first in the crypto world, as Grayscale itself has mentioned. With the new status of the company, it would be required for the Bitcoin trust to file reports regarding important updates and audited financial statements. More than this, Grayscale would have to submit the reports it publishes for GBTC quarterly and every year.
GBTC under SEC Will be Similar to an ETF
Michael Sonnenshein, the managing director at Grayscale, wanted to point out the filing doesn’t intend to make an exchange-traded fund (ETF) from GBTC. Sonnenshein said,
“While this filing should not be considered as an ETF filing, we do think given the demand we are seeing for GBTC, that by hopefully becoming an SEC reporting company, we are giving investors the level of disclosure and risks and reporting they not only want — but deserve —and this [Grayscale's filing] is a step in that direction.”
Grayscale is Hoping to Attract Institutional Investors
At this point, investors purchasing GBTC through private placement need to wait a year before they resell on the secondary market. In case the filling passes, this time of reselling will be reduced to half, so investors will gain access to the public market much earlier. By doing this, Grayscale is hoping to attract institutional investors that prefer SEC-registered products.
GBTC is in Demand
Sonnenshein had to say that while the filling isn’t an ETF and the demand for GBTC is high, becoming a SEC reporting company will make investors notice they’re being given full disclosure on the risks. He also noted people deserve to collaborate with a reporting company. It can easily be said GBTC is one of the most successful crypto trust products, as it had a $304.4 million total cumulative inflow for the year ending in September. Its highest monthly was $171.7 million in July 2019. Still, there are voices saying GBTC and many of the Bitcoin investment products are sure to lose traction if an ETF is SEC approved.
Grayscale Filed for a Bitcoin ETF in 2017
Back in 2017, Grayscale’s filling for a Bitcoin ETF was initiated and also withdrawn after SEC didn’t approve the Bitcoin ETF of Winklevoss Brothers. The same happened with the Bitwise and VanEck Bitcoin ETF filings. However, SEC recently revised its Bitwise rejection and may grant approval for its ETF application. Sonnenshein is optimistic when it comes to SEC attitude towards cryptocurrencies. He said,
“Our regulators are not only open to the asset class, but they are also very willing to engage with established players like us,”
“The various filings are moving the industry forward and providing access to the best products in the investment community.”