Grayscale Prepares for Bitcoin ETF Launch, Updates Trust Agreement

• Grayscale Bitcoin Trust (GBTC) Set for Major Update
• Details of the GBTC Update
• Second Update Proposal
• Anticipations for Spot Bitcoin ETFs
• Amendments to GBTC's Trust Agreement

Grayscale Bitcoin Trust (GBTC) Set for Major Update

Grayscale, the overseer of the Grayscale Bitcoin$42,260 -0.64% Trust (GBTC), has unveiled plans to revise the trust's agreement, marking the first update since 2018, as per a recent Wednesday filing. This move is directed at preparing GBTC for an anticipated upgrade to a spot Bitcoin exchange-traded fund (ETF), as well as to ensure fair competition with other contenders like asset management titan BlackRock.

Details of the GBTC Update

The forthcoming GBTC update, which awaits shareholder approval, entails two proposed changes to the trust agreement. The first proposal suggests changing the fee collection structure from a monthly basis to a daily one. However, this adjustment does not imply a fee reduction, something to which Grayscale has committed but hasn't finalized yet, as per an official company representative. At present, Grayscale imposes a 2% management fee for GBTC, contrasting with the average rate of 0.7%-1% for firms awaiting green light for spot bitcoin ETFs as highlighted in an analyst report by Matrixport.

Second Update Proposal

The second proposed change advocates for assets to be amalgamated in an omnibus account fashion. This will aid in smoother creation and redemption of shares, which serves as the primary processing mechanism for the ETF. This innovative method is a component of Coinbase Custody's service, a feature that other spot ETF applicants, including the BlackRock iShares product, will also use.

Anticipations for Spot Bitcoin ETFs

Analysts forecast that the U.S. Securities and Exchange Commission (SEC) could approve multiple spot Bitcoin (BTC) ETFs in a small time frame. This prediction has resulted in a competitive climate amongst applicants, as the pioneering victor is anticipated to gain a substantial initial advantage in attracting a large share of everyday investors.

Amendments to GBTC's Trust Agreement

Grayscale has today proposed amendments to the GBTC's Trust Agreement with an aim to introduce operational efficiencies that we believe will benefit both Grayscale as well as GBTC, a Grayscale representative stated via email. This course of action is typical of our standard business operations, and GBTC is poised to upgrade to a spot Bitcoin ETF on NYSE Arca as soon as we receive the necessary regulatory approvals.

The proposed changes will not incur any additional costs for Grayscale shareholders, and neither of them are crucial for the conversion to an ETF, according to the filing. Shareholders have a window of 20 days from Wednesday's filing to vote on the update proposals.

Edited by Jonathan Stoker