Valkyrie Announces Intention to Sponsor Grayscale’s Bitcoin Trust as Expansion of GBTC Discount to NAV – Bitcoin News

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 suited” for the role and plans to facilitate a buyback at net asset value (NAV) through a Regulation M filing.

Valkyrie proposes to take over management of Grayscale’s Bitcoin Trust

Grayscale’s Bitcoin Trust (GBTC) has faced challenges in 2022 as the fund’s discount to net asset value (NAV) hit record levels. In the last six months, the difference between the fund’s value and NAV has increased by more than 35% to the end of September 2022. As of December 30, 2022, the discount has expanded to more than 45%. This means that the value of the bitcoin stock is currently lower than the current BTC spot prices. Valkyrie wants to remedy the situation by starting another foundation, taking over the sponsorship.

“We recognize 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,” Valkyrie said. “However, in light of recent events involving Grayscale and its family of subsidiaries, it is time for a change. Valkyrie is the best company to manage GBTC to ensure its investors are treated fairly.

The fund manager said on Friday it has launched the Valkyrie Opportunistic Fund, which aims to take advantage of GBTC’s decline in net asset value. According to Valkyrie, the team will add to their GBTC holdings and eventually show “the true value of the underlying bitcoin to our investors.” At the time of writing, Bitcoin Trust, managed by Grayscale, holds approximately 643,572 BTC.

Following the announcement, Erik Balchunas, senior exchange-traded fund (ETF) analyst for Bloomberg, said: shared his opinion About Valkyrie’s intentions. “Valkyrie is launching the Valkyrie Opportunistic Fund to become a new sponsor of GBTC (which trades at a 50% discount) and facilitate redemptions at NAV and a 75bps payout,” Balchunas said. “Long shot, but speaks to the growing pressure.”

In the announcement, Valkyrie offered three offers:

  • Facilitate regular net asset value (NAV) payments for all investors who so desire by filing a timely Regulation M filing. This will ensure that all investors have the opportunity to redeem their shares at a fair price without any delay or hindrance.
  • Reduce fees to fairer levels in line with industry best practices. We are offering a payout of 75 basis points, which is significantly lower than the current 200 basis points.
  • Try to offer both bitcoin and cash refunds for investors. This will give investors more flexibility and choice when it comes to redeeming their shares.

Valkyrie’s offer comes at a time when Grayscale’s parent firm, Digital Currency Group (DCG), is having trouble with Genesis Global Capital, a subsidiary. In mid-November, Genesis’ lending arm stopped withdrawing funds and issuing new loans on the platform. Cryptocurrency exchange Genesis reportedly owes Gemini $900 million, and Gemini has formed a committee with financial advisor Houlihan Lokey to recover the funds.

Additionally, Gemini faces a potential class action lawsuit from two investors over the company’s Gemini Earn program. Despite the speculation, CEO Barry Silbert said in a letter to DCG’s shareholders that the company “will continue to be an industry-leading builder.” At the time of writing, Grayscale or DCG have not responded to Valkyrie’s offer to be the new GBTC sponsor.

Tags in this story

asset manager, Barry Silbert, Bitcoin, Bitcoin (BTC), DCG shareholder, Eric Balchunas, fund manager, Gemini, genesis, grayscale, Grayscale’s Bitcoin Trust (GBTC), net asset value (NAV), opportunistic fund, buyback, Regulation File M , sponsor, Tennessee, Valkyrie Investments, Valkyrie Proposal

What do you think of Valkyrie’s offer to sponsor GBTC? Let us know your thoughts on this topic in the comments section below.

Jamie Redman

Jamie Redman is Head of News at News and a fintech journalist based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open source code and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for News about disruptive protocols emerging today.

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