Grayscale May Return 20% Of Investor Capital If SEC Rejects Spot Bitcoin ETF: Report

Zinger Key Points
  • Grayscale intends to return part of GBTC capital to shareholders if the fund does not get converted into an ETF.
  • Compared to the price of Bitcoin it owns, GBTC currently traders at a 49% discount.

If the U.S. Securities and Exchange Commission (SEC) declines to approve its spot Bitcoin BTC/USD exchange-traded fund (ETF), Grayscale Investments is considering options to return some of the capital of its flagship Grayscale Bitcoin GBTC product.

According to the Wall Street Journal, citing a letter to investors, Grayscale is to offer a tender for 20% of the existing GBTC shares, which are now trading at a 49% discount to its net asset value (NAV).

Earlier this month, the SEC blamed a lack of regulatory monitoring as the reason Grayscale's attempt to convert its Bitcoin trust into an ETF was unsuccessful many times.

Also read: Will Binance Succumb To Crypto Market Fears?

According to Grayscale managing director Michael Sonnenshein, the firm currently intends to continue operating GBTC without an ongoing redemption campaign until it is successful in turning it into a spot Bitcoin ETF if it is unable to restore capital to GBTC shareholders via a tender offer or ETF.

Grayscale filed a lawsuit against the SEC in June, claiming that it "vehemently disagreed" with the agency's decision to reject the company's ETF application.

Compared to its all-time high in November 2021, the price of Bitcoin and other major cryptocurrencies like Ethereum ETH/USD has fallen nearly 70%, wiping out billions of dollars of investors' wealth and bankrupting several large firms.

Next: Analyst Warns Ethereum Could Tumble 65% From Its Current Level, Why He Sees More Downside

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