- A portion of the Bitcoins backing the existing fund would be used to seed the new ETF.
- The move comes amid relentless outflows from GBTC since its conversion to ETF.
Digital asset manager Grayscale Investments is planning a miniature version of its flagship Bitcoin [BTC] Exchange Traded Fund (ETF).
This was revealed via a filing with the US Securities and Exchange Commission (SEC).
GBTC’s spin-off
The so-called Grayscale Bitcoin Mini Trust would operate under the ticker “BTC” after regulatory approval.
It was expected to have a “materially lower” fee than the larger Grayscale Bitcoin Trust (GBTC), currently the largest digital asset fund in the world.
The mini-fund would be a “spin-off” of GBTC, meaning that some of the Bitcoins backing the existing fund would be used to seed the new ETF.
Grayscale stated that the move would benefit existing GBTC shareholders by allowing them to benefit from a portion of the new fund at a lower blended fee.
The other big advantage was that GBTC holders could buy shares of the mini-fund without any tax liability.
GBTC bleeds with effusion
The motivation to launch a more affordable Bitcoin investment vehicle comes amid massive GBTC outflows, with the 1.5% fee cited as a key factor.
The management fee charged by Grayscale was the highest of all ETF issuers. Most other players charged between 0.2% and 0.4%.
Grayscale defended the high fees, citing the track record and status in the market.
However, the high costs seemed to impact the fund’s performance.
According to Bloomberg analyst James Seyffart, GBTC has seen outflows of $11 billion since switching to a spot ETF, compared to inflows of $7.45 billion before the conversion.
Additionally, according to ETF analyst Eric Balchunas, GBTC saw the second-highest outflows of all ETFs in the past 15 years.
Source: Bloomberg Intelligence
Read Bitcoin’s [BTC] Price forecast 2024-25
Many of these redeemed Bitcoins were likely reallocated to cheaper spot ETFs. Blackrock’s IBIT, for example, has seen over $11 billion in net inflows since listing.
As a result, assets under management (AuM) have risen above $15 billion, according to AMBCrypto’s analysis of SoSo value facts.