Valkyrie Reveals Intention to Sponsor Grayscale’s Bitcoin Trust as GBTC Discount to NAV Widens – Bitcoin News
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Tennessee-based asset manager Valkyrie Investments has announced plans to become a new sponsor of Grayscale’s Bitcoin Trust (GBTC). The company says it is “uniquely qualified” for the role and plans to facilitate redemptions at net asset value (NAV) through a Regula M application.
Valkyrie offers to take control of Grayscale’s Bitcoin Trust
Grayscale’s Bitcoin Trust (GBTC) has faced challenges in 2022, with the fund’s discount to net asset value (NAV) reaching record levels. In the last six months, the difference between the fund’s value and net worth has increased by more than 35% by the end of September 2022. From 30.12.2022, the discount has further increased to more than 45%. This means that the value of the bitcoin fund is currently lower than the current spot prices of BTC. Valkyrie wants to remedy the situation by taking over the sponsorship and setting up a new fund.
“We recognize that the shades of gray have played an important role in the evolution and growth of the bitcoin ecosystem with the launch of GBTC, and we respect the team and the work they are doing,” Valkyrie wrote. “However, in light of recent events involving the Grayscale family and its affiliates, it is time for a change. Valkyrie is the best company to manage GBTC to ensure that its investors are treated fairly.
The fund manager said on Friday that it will launch the Valkyrie Opportunistic Fund, a project that aims to take advantage of GBTC’s discount to net asset value. According to Valkyrie, the team is increasing its GBTC holdings, which may eventually show “the true value of the underlying bitcoin to our investors.” At the time of writing, the Bitcoin Trust managed by Grayscale holds approximately 643,572 BTC.
Following the announcement, Eric Balchunas, ETF analyst at Bloomberg, shared his opinion About Valkyrie’s intentions. “Valkyrie launches Valkyrie Opportunistic Fund to try to become a new sponsor of GBTC (trading at 50% discount) and facilitate redemptions at NAV and 75bps fee,” Balchunas tweeted. “Look, but speaks of increasing pressure.”
In the announcement, Valkyrie offered three suggestions:
- Facilitate regular redemptions at net asset value (NAV) for all investors who want it with a timely Regulation M application. This ensures that all investors have the opportunity to redeem their shares at the fair price without delays or obstacles.
- Reduce fees to a fairer level in line with industry best practices. We propose a fee of 75 basis points, which is significantly lower than the current rate of 200 basis points.
- Try to offer redemptions in both bitcoin and cash to investors. This gives investors more flexibility and choice in redeeming their shares.
Valkyrie’s offer comes at a time when Grayscale’s parent company, Digital Currency Group (DCG), has had issues with its subsidiary Genesis Global Capital. In mid-November, Genesis’ lending department suspended withdrawals and issuing new loans on the platform. It has been reported that Genesis owes cryptocurrency exchange Gemini $900 million, and Gemini has formed a committee, including financial advisor Houlihan Lokey, to recover the funds.
In addition, Gemini faces a possible class action lawsuit from two investors regarding the company’s Gemini Earn program. Despite the speculation, DCG’s shareholder letter from CEO Barry Silbert stated that the company “will continue to be the industry’s leading builder.” At the time of writing, neither Grayscale nor DCG have responded to Valkyrie’s offer to become a new GBTC sponsor.
What do you think of Valkyrie’s offer to sponsor GBTC? Let us know what you think about this topic in the comment section below.
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