Grayscale, a cryptocurrency asset management company, submitted an application to the SEC last month, planning to launch a mini version of the Grayscale Bitcoin Spot ETF. According to the estimated financial statements, this ETF will charge a management fee of 0.15%, which is lower than all other Bitcoin Spot ETFs and is expected to restore the competitiveness of Grayscale products.
Grayscale recently submitted an application to the U.S. Securities and Exchange Commission (SEC) seeking to issue a mini version of the Grayscale Bitcoin Spot ETF called “Bitcoin Mini Trust” (BTC) with lower management fees. According to the latest estimated financial statements submitted by Grayscale, this ETF will charge a management fee of 0.15%, which is lower than all current Bitcoin Spot ETFs.
Grayscale’s GBTC currently charges a high management fee of up to 1.5% and continues to experience net outflows of funds. According to the latest documents, when the mini version of GBTC is launched, Grayscale will inject 10% of GBTC’s assets into the fund, and the mini version of GBTC shares will be automatically issued and distributed to GBTC shareholders.
According to Coindesk’s report, the mini version of GBTC aims to provide GBTC investors with an option with lower management fees, which is more competitive than other Bitcoin Spot ETFs approved in January this year. Currently, the lowest-cost Bitcoin Spot ETF is Franklin’s EZBC, with a management fee of 0.19%.
The report mentioned that the split is considered a tax-free event for GBTC investors, who can automatically transfer their existing shares to the new fund without paying capital gains tax. This is advantageous for early GBTC investors who have gained significant profits. If they want to sell their existing GBTC and switch to other competing products with lower management fees, they will face significant capital gains tax.
Eric Balchunas, a senior ETF analyst at Bloomberg, reminded that the financial statements released by Grayscale are estimated, so the management fee for the mini version of GBTC is just an estimated assumption. However, the good news is that Grayscale knows that people are paying attention, so they chose the extremely low figure of 0.15%.
According to data from SoSoValue, since GBTC converted to a Bitcoin Spot ETF in January this year, there has been a net outflow of up to $16.7 billion. Currently, the managed assets of GBTC have dropped to approximately $19.6 billion. Its biggest competitor, BlackRock’s IBIT, has experienced a net inflow of $15.4 billion and its managed assets have grown to approximately $17.6 billion.
If the mini version of GBTC can be launched, it is expected to restore the competitiveness of Grayscale products. Nate Geraci, President of ETF Store, stated that this is a positive factor for Grayscale, and Grayscale could even consider setting the management fee for the mini version of GBTC lower, at 0.1%. He pointed out that if GBTC maintains a management fee of 1.5%, its asset size will gradually decline over time.