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Manager of the Grayscale Bitcoin Trust (GBTC), Grayscale is currently updating its trust agreement as the wait for spot Bitcoin exchange-traded funds (ETFs) enters top gear. That is according to a Wednesday filing by the company. However, the move is Grayscale’s first such in as long as five years, signalling a significant moment in the company’s history.
Per the filing, Grayscale is looking to update the structure of GBTC to put it in a good position to receive the green light for a spot Bitcoin ETF. Moreover, it also wants to ensure that it has equal chances with the likes of top spot Bitcoin ETF applicants such as asset management giant BlackRock.
Grayscale’s trust agreement update proposes two major changes which will be decided by shareholder vote. Firstly, it seeks to modify its fee structure. Grayscale wants to go from charging its fees monthly to daily fees.
According to a company spokeswoman, this change is not to be confused with a fee reduction. Rather, it is only a structural modification. However, a fee reduction might also be in the works and may come later on. According to the spokeswoman, the company is yet to decide on that for now.
Meanwhile, Grayscale stands apart from most of its counterparts in terms of how much they charge. That is according to an analyst report by Matrixport. The report claims that Grayscale currently charges a 2% management fee for GBTC. Whereas, other firms awaiting approval for spot bitcoin ETFs charge between 0.7%-1%.
The second update borders on how assets can be custodied in a way that will ensure a more seamless share creation and redemption. And for what it’s worth, that is the exact basis upon which an ETF is processed.
Grayscale proposes that assets be pooled in a typical omnibus account manner. Like BlackRock and many other spot ETF applicants, Grayscale will employ Coinbase Custody’s service.
It has somewhat become a popular belief that the US Securities and Exchange Commission (SEC) will approve several spot bitcoin (BTC) ETFs all at once. Many analysts even believe that the approvals may come as early as the first quarter (Q1) of 2024. This was detailed in a recent Coinspeaker report on the SEC’s early update on Franklin and Hashdex Bitcoin ETFs.
To this end, many of the applicants have entered into a rather unspoken competition. That is as they race to get an early hold on the institutional investors, gaining a first-mover advantage over their counterparts.
Overall, Grayscale is hoping that the proposed changes to GBTC’s Trust Agreement would help both Grayscale and GBTC to achieve operational efficiencies. The Wednesday filing did reveal that shareholders have up to 20 days to vote on the proposals.