In a significant move, a federal appeals court has instructed the SEC to reconsider its decision to dismiss the trust issuer's proposal to transform the Grayscale Bitcoin Trust into an exchange-traded fund (ETF). This development might pave the way for the first-ever spot bitcoin ETF in the United States.

The Grayscale Bitcoin Trust (GBTC), managed by Grayscale Investments, which oversees the world's largest cryptocurrency fund, initially sought approval to convert its closed-end fund into an ETF back in October 2021. The SEC's rejection followed, citing concerns over issues like preventing market manipulation and other related matters.

Responding swiftly, Grayscale lodged an appeal against the SEC's decision, immediately seeking a review from the U.S. Court of Appeals for the District of Columbia Circuit. It's worth noting that Grayscale operates under the umbrella of Digital Currency Group.

This court ruling comes amid a flurry of applications from major institutions aiming to establish spot bitcoin ETFs. Notably, BlackRock, a prominent asset manager, submitted its application in June, generating substantial optimism about the potential approval of a spot bitcoin ETF. Other players like Fidelity, a significant mutual-fund manager, have also thrown their hats into the ring, seeking approval for bitcoin ETFs. Since 2021, seven bitcoin futures ETFs have been actively traded.

Interestingly, the Grayscale product has been trading at a discount compared to its underlying asset since February 2021. This discount reached an unprecedented 50% in December, triggered by the SEC's reiterated reasons for denying the conversion of the trust into an ETF. However, the situation began to shift as notable entities applied for bitcoin spot ETFs, causing GBTC's discount to narrow to around 25%, marking the smallest discount since early 2022.

Industry experts have long predicted that transitioning from a closed-end fund to an ETF could effectively eliminate GBTC's discount. This is attributed to the inherent nature of ETFs, which generally trade close to their intrinsic value.

Notably, the fund's structure will remain largely unchanged, with a few key adjustments. The shares will now be officially registered with the SEC under the Securities Act of 1933. Before the conversion, GBTC shares were made available through a private placement process, primarily accessible to accredited investors and subject to a six-month holding period.

Another notable modification involves the shares being migrated from over-the-counter markets to the NYSE Arca. Additionally, the revamped structure will permit redemptions, a feature previously unavailable. Grayscale has also expressed its intention to reduce fees if GBTC undergoes the transformation into an ETF. The fund, which previously imposed a 2% annual fee, is poised for changes that could potentially benefit investors.

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$BTC

Aug 7, 2024

According to CryptosHeadlines on CoinMarketCap. Grayscale, a leading cryptocurrency asset manager, has unveiled two new investment trusts: the Grayscale Bittensor Trust and the Grayscale Sui Trust. These additions aim to broaden the horizons for investors by focusing on the burgeoning fields of artificial intelligence and decentralized applications.
The Grayscale Bittensor Trust is set to invest in TAO, the token linked to the Bittensor Protocol. This protocol incentivizes the development and deployment of open-source AI technologies. By channeling investments into TAO, Grayscale hopes to support the growth of innovative AI solutions within the blockchain ecosystem.


Similarly, the Grayscale Sui Trust will focus on SUI, the native token of the Sui network. Sui is a layer-1 blockchain designed to host decentralized applications (DApps), promising enhanced scalability and efficiency. The Sui network aims to provide a robust infrastructure for DApp development, potentially transforming various sectors through decentralized solutions.
These new trusts are available exclusively to eligible individuals and institutional accredited investors, excluding retail traders. Rayhaneh Sharif-Askary, Grayscale’s head of product and research, expressed her enthusiasm, stating, “With the launch of Grayscale Bittensor Trust and Grayscale Sui Trust, we continue to provide investors with familiar products that enable access to tokens at the cutting edge of the crypto ecosystem’s continued evolution.”
The new trusts operate similarly to Grayscale’s existing single-asset investment trusts, such as the Grayscale Bitcoin Trust (GBTC). They offer a regulated pathway for investors to gain exposure to these emerging crypto assets without the need to directly purchase and manage the tokens.


Grayscale Ethereum Trust Sees $78M Outflow, Possible Bullish Indicators
In related news, the Grayscale Ethereum Trust, which recently transitioned into an exchange-traded fund (ETF), experienced a significant outflow of approximately $78 million on August 1. This withdrawal pushes the total outflows past $2 billion. Despite the large outflows, analysts suggest that this trend may be slowing down, potentially signaling a bullish shift for Ether, which is currently trading at $2,468.
Grayscale’s pioneering efforts in providing institutional investors with access to cryptocurrencies continue to evolve with the market. The introduction of the Bittensor and Sui Trusts underscores Grayscale's commitment to staying at the forefront of the crypto ecosystem, offering investors new opportunities to engage with the latest technological advancements.
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