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Grayscale Files for New Low-Fee Bitcoin ETF

Industry experts see this as a way for Grayscale to retain investors who might have been tempted to move to lower-cost alternatives.

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In a move designed to address investor concerns about fees, Grayscale Investments has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for a new exchange-traded fund (ETF) called the Grayscale Bitcoin Mini Trust, which has the ticker BTC.

Grayscale's existing product, the Grayscale Bitcoin Trust (GBTC), was previously the only major vehicle for institutional investors to gain exposure to Bitcoin through a traditional investment structure. However, the landscape shifted dramatically in January 2024 with the SEC's approval of several spot Bitcoin ETFs. These new funds offered a more direct way to invest in Bitcoin, and crucially, with significantly lower fees compared to GBTC.

As a result, GBTC has seen capital outflows of $11.05 billion since January, according to data from BitMEX Research.

The Grayscale Bitcoin Mini Trust: A Low-Cost Solution

Grayscale's BTC directly responds to the competition from these new spot Bitcoin ETFs. Here's what we know so far:

  • Lower Fees: Grayscale hasn't disclosed the exact fee structure yet, but it's designed to be "materially lower" than the fees associated with GBTC.
  • Innovative Spin-off Mechanism: To "seed" the new Mini Trust, Grayscale plans to allocate a portion of the Bitcoin currently held by GBTC (on a yet-to-be-determined date). These Bitcoin holdings will be distributed proportionally to existing GBTC shareholders. This unique structure aims to avoid capital gains tax implications for GBTC investors.

“At Grayscale, we aim to continually provide our investors with compelling, future-forward opportunities to access Bitcoin and the crypto ecosystem," said Jennifer Rosenthal, head of communications and public affairs at Grayscale, said.

The Grayscale Bitcoin Mini Trust's approval hinges on the SEC's green light. While details like the exact fee structure and record date are still pending, this filing coincides with a significant milestone: Bitcoin reaching a new all-time high of $71,415 on March 11. This surge in value underscores the growing mainstream interest and adoption of cryptocurrencies, making Grayscale's new low-cost ETF a timely offering for investors seeking exposure to this dynamic market.

Competition is steep among spot Bitcoin ETFs, of which there are over 10 currently. Just yesterday, investment manager VanEck said it will offer a 0% management fee for its Bitcoin ETF, HODL, until 31 March 2025.