Grayscale advances ETF conversion plan and selects Bank of New York Mellon to provide Bitcoin ETF services

- Grayscale Investments has selected BNY Mellon to provide asset servicing for its flagship product.

- If Grayscale Bitcoin Trust (GBTC) is successfully converted into an ETF, BNY Mellon will also provide ETF services.

Grayscale Investments has reached an agreement with Bank of New York Mellon that will see the global investment firm serve as the service provider for its flagship product, Grayscale Bitcoin Trust (GBTC).

Starting October 1, Bank of New York Mellon, one of the world's largest asset service companies, will provide fund accounting and administration services for Grayscale Bitcoin Trust (GBTC). Once the plan to convert GBTC into an exchange-traded fund (ETF) is realized, Bank of New York Mellon will provide transfer agency and ETF services for the new product.

Note: On April 5, Grayscale confirmed in a document submitted to the U.S. SEC that it intends to convert its Bitcoin Trust into an exchange-traded fund (ETF), and the timing of the conversion depends on the regulatory environment. It is reported that Grayscale initially submitted an ETF application in 2016 and had a dialogue with the SEC for most of 2017, but eventually withdrew the application.

Grayscale stated in the blog post that although only GBTC and ETHE are currently SEC reporting companies, Grayscale uses the same business model for all existing products: each Grayscale product is at a different stage of its life cycle, and its goal has always been to convert these products into ETFs when conditions permit.

Today’s news suggests Grayscale is moving forward with the ETF conversion plan it announced in April.

“Partnering with BNY Mellon as part of our commitment to transition the Grayscale Bitcoin Trust into an ETF is an important milestone,” Grayscale Investments CEO Michael Sonnenshein said in a statement.

By operating its GBTC as a Bitcoin ETF, Grayscale will be able to charge lower management fees and more easily move money in and out of the fund. Currently, the asset manager charges a high 2% annual management fee, and institutions are required to lock up their Bitcoin for at least 6 months, which means their investment has extremely low liquidity.

This is worth noting. Previously, the trading price of the trust fund's shares was often higher than the spot price of Bitcoin (i.e., a positive premium). However, since the listing of Canada's first Bitcoin fund, Purpose Bitcoin ETF, on February 18, GBTC's positive premium has continued to decline, and entered the negative premium range on the 22nd, which has continued to this day.

Is a Bitcoin ETF coming?

The U.S. Securities and Exchange Commission (SEC) has yet to approve a Bitcoin ETF, despite several companies having applied.

As mentioned earlier, Grayscale submitted its first application in 2016, but withdrew it the following year because it expected it to be rejected.

On Monday, the company's vice president of legal affairs, Craig Salm, told Decrypt that while the ETF review process could take until 2022, it could come sooner. He added that Grayscale is ready to convert its existing trust shares into ETFs once the U.S. SEC gives the green light.

The company also announced yesterday that the Grayscale Digital Large Cap Fund (GDLC), which includes six major cryptocurrencies, has become a US SEC reporting company. In addition, Grayscale has submitted Form 10 documents for three product registration statements, namely BCHG, ETCG and LTCN. It is reported that GBTC and ETHE have become SEC reporting companies. The new regulations change the lock-up period of shares, making them more attractive to conservative investors.

As the US SEC continues to advance its Bitcoin ETF review, signing a cooperation agreement with Bank of New York Mellon will also put Grayscale in a prime position. Once the Bitcoin ETF application is approved, it will undoubtedly usher in another round of digital gold rush.