Prominent Bitcoin fund Grayscale Bitcoin Trust (GBTC) are seeking alternatives to let shareholders get their money, if the exchange traded funds (ETF) will not become a reality. The firm reportedly came to the conclusion that it would return a share from its bitcoin fund. This step would be taken in case if the aforementioned conditions do not meet.
The Wall Street Journal reported, “Grayscale Investments said the firm would explore new options to return a portion of the Sivine Bitcoin Trust’s capital to shareholders if it fails to transform the world’s largest bitcoin fund into an exchange-traded fund.”
As per the reports, Grayscale CEO Michael Sonnenshie said the further options would include 20% of the shares worth 10.7 billion USD within the tender offer.
In an interview earlier, Sonnenshein said that the firm does not have any specific timeline for looking for other options than ETF conversions for now. Though it is all set to face any possible scenario.
A closed end funds focused event-driven hedge fund, Marlton LLC highlighted in last year’s open letter that a tender offer could help Grayscale to narrow down discount of GBTC, even if not eliminating it completely.
Over this, the biggest bitcoin fund said that potentially pursuing a tender offer would depend on approval from shareholders and SEC. Further it also added that if the first attempt of tender offers would turn out to be successful then the company would consider to go for more such additional offers.
Primarily, a tender offer is when a company makes a direct appeal to its shareholders asking to sell or tender their holdings of shares, though the price would be specific and it would be done under a certain timeframe.
Similar to a closed-end fund, which frequently trades at a premium or discount to the value of its holdings, the Grayscale Bitcoin Trust, also known by its ticker code GBTC, operates on the stock market. The discount rate has significantly increased amid the decline in digital assets this year. According to YCharts, on Friday, GBTC was selling at a 49% discount in comparison to the value of the bitcoins it owned. Investors can only sell their GBTC holdings in the open market at a loss because the shares can currently be minted but not redeemed. The trust levies a 2% yearly fee.
Source: https://www.thecoinrepublic.com/2022/12/22/grayscale-keeping-tender-offer-as-option-if-bitcoin-etfs-fail-request/