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Odaily Translator | Nian Yin Si Tang
, by Katie Greifeld & Vildana Hajric
Odaily Translator | Nian Yin Si Tang
Valkyrie Investments has a bigger competing product proposal: becoming the new sponsor and administrator of the Grayscale Bitcoin Trust, the largest fund in the crypto industry.
The Nashville, Tennessee-based asset manager with roughly $180 million in assets under management announced on Friday the launch of the Valkyrie Opportunistic Fund, which aims to take advantage of deep discounts on Grayscale Investments' GBTC. The Valkyrie Fund will increase its holdings of GBTC, enabling the firm to "realize for investors the true value of Bitcoin, GBTC's underlying asset." Valkyrie says this is something it will aggressively pursue on behalf of investors.
“We understand that Grayscale has played an important role in the development and growth of the Bitcoin ecosystem with the launch of GBTC, and we respect the team and the work they do.” Steven McClurg, co-founder and chief investment officer of Valkyrie Investments, said in a statement "However, in light of the recent events involving Grayscale and its family of affiliated companies, it is time for a change. Valkyrie is in the best position to manage GBTC to ensure its investors are treated fairly," said a letter posted on the company's website. "
Currently, GBTC is trading at a roughly 50% discount to the value of Bitcoin held. The crux of the matter is the structure of GBTC: while new fund shares can be created, they cannot be destroyed as demand for the trust's underlying bitcoin cools, leading to a discount to NAV. Grayscale is trying to convert GBTC into an exchange-traded fund, an investment product that allows shares to be redeemed. In June, the US Securities and Exchange Commission (SEC) rejected the proposal, prompting Grayscale to file a lawsuit against the SEC within hours.expressHowever, in a letter to investors in December, Grayscale CEO Michael Sonnenshein
express
, if GBTC cannot be converted into a Bitcoin ETF in the end, a tender offer may be made for 20% of the US$10.7 billion issued trust fund shares.
Converting GBTC to an ETF will help align the price of its shares with its underlying value, Grayscale said. Market participants will be able to create and redeem GBTC shares, ensuring they reflect the underlying value of their Bitcoin holdings. It is reported that the negative premium rate of GBTC once exceeded 48%.
Michael Sonnenshein said Grayscale did not have a specific timetable for when it would explore options other than ETFs, but it was prepared for all scenarios.
Grayscale did not immediately respond to an email seeking comment.
Valkyrie said it proposed to facilitate the redemption of GBTC by investors at net asset value through the filing of a Regulation M filing. The company is also considering cutting the fee to 75 basis points from the current 200 basis points. Additionally, both Bitcoin and cash are being redeemed by investors.
McClurg, who wrote Friday's letter, previously orchestrated or participated in closed-end fund acquisitions or restructurings while he was a managing director at Guggenheim Partners.Valkyrie said that since its inception in January 2021, the company’s own Bitcoin trust fund has seen daily liquidity. The firm also oversees a number of cryptocurrency-focused exchange-traded funds, including the Valkyrie Bitcoin Strategy ETF (fund symbol BTF).It is worth noting that a recent private financial document
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