grayscale investments

Peter Schiff Sends Stern Warning to Barry Silbert Over Grayscale Bitcoin Trust Price Collapse

Peter Schiff is not happy with Grayscale investments’ national ad campaign that aims to push for more awareness of cryptocurrencies and to promote the mainstream adoption of Bitcoin and Ethereum.

Grayscale’s parent company CEO, Barry Silbert, announced the TV ad campaign on Aug. 7, 2020.

Peter tweeted that despite a massive TV ad campaign to pump the price, the Grayscale Ethereum Trust just experienced its lowest price drop since March and has fallen over 80% since its June high.

Institutional Investors Dump Shares

Peter Schiff has faulted Grayscale Investments crypto asset management company for failing to push the shares of its Ethereum Trust with its massive national TV ad campaign. Schiff thinks that Grayscale Ethereum Trust’s poor performance is like a major indicator for the more popular Grayscale’s Bitcoin Trust that was also featured in the same campaign.

Similar to what Schiff has said, Grayscale Ethereum Trust (the trust named, ETHE) took a significant beating over the past few months, falling over 80% from its June high when investors were willing to pay more than 1,000% premium to buy Ether.

The rapid decline began when a huge amount of ETHE shares became available for trading on the secondary OTC markets after the expiration of a year-long lockup period. On Tuesday, 8th September, ETHE share price sits around $49.2, the lowest level since the March crypto crash.

With the ETHE premium goes down, Schiff insists that it is a sign of “waning demand.”

Millennials Prefer Bitcoin, Older Investors Go for Gold

Peter Schiff, the well-known gold investor and the Euro Pacific Capital CEO, has been known for a long-time criticizing Bitcoin, claiming that it is not a good investment and calling it a pyramid scheme.

His son, Spencer Schiff, recently began investing in Bitcoin. But Schiff complained about his son buying more Bitcoin against his advice. Schiff began a poll asking his followers on Twitter if they want to follow his advice or his son’s. The poll showed that the majority of the Twitter community appeared backing his son.

Schiff continued his anti-Bitcoin narrative, stating that his “concern is for older (investors) who will lose a lot more, and who don’t have enough years left to make back what the loss.”

The poll came a few weeks after Schiff had asked the Twitter crypto community to send his son some Bitcoin for his 18th birthday.

According to JPMorgan Chase research, older investors tend to favor gold and bond funds, while millennials lean towards crypto and tech-related investments. Older generation investors appear to align more with gold, traditionally viewed as a safe-haven asset. On the other hand, millennials embrace crypto and tech-related investments more, despite volatility and other risks associated with cryptocurrency.

Grayscale Survey: 55% of US Investors Like Bitcoin in 2020

Grayscale Investments, a leading digital currency asset manager, has released a report entitled Bitcoin Investor Study 2020 showing that 55% of US investors are looking to invest in Bitcoin in 2020.

COVID-19 pushing Bitcoin investments in 2020

This online survey involved 1,000 U.S. consumers aged between 25 and 64 years and was conducted between June 26 and July 12 this year. It acknowledged that the coronavirus (COVID-19) pandemic and subsequent economic recession has forced governments, corporations, small businesses, and individuals back to the drawing board when making investment choices.

As a result, radical changes have been triggered in a short time and fostered the opportunity for innovation in areas like Bitcoin investment. This explains the reason why the number of US investors interested in Bitcoin rose by 19% from 36% in 2019.

The survey noted:

“More than half of U.S. investors are interested in investing in Bitcoin in 2020, more than half (55%) of survey respondents expressed interest in Bitcoin investment products. This marks a significant increase from the 36% of investors who said they were interested in 2019.”

The coronavirus pandemic has been a key driver of Bitcoin investments in 2020. Notably:

“38% of Bitcoin investors had invested within the last four months, and nearly two-thirds of those reported that the ramifications of COVID-19 were a factor in their decision to do so.”

Bitcoin viewed as a safe-haven asset

Bitcoin is continuously being touted as a safe-haven asset, given that 83% of the respondents made investments in this digital currency within the last year based on its attractiveness as a modern investment portfolio.

As per the announcement:

“Among those who reported investing in Bitcoin, 83% have made investments within the last year, indicating that digital currencies are an increasingly attractive component of modern investment portfolios.”

Furthermore, it was disclosed that the number of potential Bitcoin investors in 2020 stands at 32 million compared to 21 million last year. Notable strides are continually being made in the Bitcoin space. For instance, the largest dollar value crypto transaction in history was recently made after $1 billion in Bitcoin was moved.

Grayscale Plans to Offer More Digital Asset Products to Meet Rising Investor Demand

Grayscale Investments LLC, the world’s largest digital currency asset manager, has announced that it is considering several new digital assets for potential new products. In this way, the New York-based company continues seeking ways to better meet the rising investor demand for exposure to digital assets through regulated, secure, and familiar investment products.

The company is currently considering the following digital assets: Aave (AAVE), Basic Attention Token (BAT), Cardano (ADA), Chainlink (LINK), Compound (COMP), Cosmos (ATOM), Decentraland (MANA), EOS (EOS), Filecoin (FIL), Flow (Dapper Labs) (FLOW), Livepeer (LPT), MakerDao (MKR), Monero (XMR), Numeraire (NMR), Polkadot (DOT), Reserve Rights (RSR), Stacks (STX), Sushiswap (SUSHI), Synthetix (SNX), Tezos (XTZ), The Graph (GRT), Uniswap (UNI), and Yearn Finance (YFI).

Grayscale CEO, Michael Sonnenshein, said: “We may not turn each of these assets into one of our landmark investment products. But as a firm that has been on the vanguard of connecting the legacy financial system with the new, digital currency-driven financial system, we view it as our responsibility to introduce investors to more diversity in this space.”

The process of establishing an investment product structured similarly to those that the company already provides a significant consideration and review, and is subject to enormous internal controls, regulatory considerations, and adequately secure custody arrangements. Therefore, there is no guarantee that the assets mentioned above list would get a corresponding investment product. The firm said that any newly-created products will be announced separately upon launch.

Grayscale currently offers eight single asset investment trusts including (Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Horizen (ZEN), Litecoin (LTC), Stellar Lumens (XLM), and Zcash (ZEC). The firm also provides one diversified fund (Grayscale Digital Large Cap Fund) that offers exposures to top cryptocurrencies by market capitalization.

Emergence of New Competitors

Grayscale’s trusts help investors gain exposure to digital assets through a more traditional investment vehicle by purchasing its publicly listed shares.

However, this year has witnessed the launch of multiple competing products. For example, Bitcoin Exchange-Traded Funds (ETFs) are gaining traction as new competitors for Grayscale are emerging. Last month, Osprey Funds LLC launched an over-the-counter (OTC) Bitcoin Trust similar to Grayscale’s Bitcoin Trust (GBTC). Besides that, ETFs seems to be taking off in Canada. During this month, the Ontario Securities Commission, Canada’s securities regulator, approved the launch of Purpose Bitcoin ETF by Purpose Investment Inc Toronto-based asset management firm. Evolve Funds Group Inc. also launched its Bitcoin ETF that started trading on the Toronto Stock Exchange.

The rising competition has impacted Grayscale’s business. Specifically, competition may erode the demand for the Grayscale Bitcoin Trust (GBTC) product, which could result in a collapsing premium or even a discount. GBTC currently holds more than 655,750 Bitcoins worth of $31.6 billion. However, this week the $31.6 billion has dropped by 21% as investors have rushed to sell off their holdings.

BNY Mellon Bank Tapped to Provide Grayscales with Bitcoin ETF Services

Grayscale Investments LLC announced Tuesday to select the BNY Mellon bank (The Bank Of New York Mellon Corporation) as its assets service provider for the Grayscale Bitcoin Trust. The development comes when the crypto firm plans to convert its Bitcoin fund into an Exchange-Traded Fund (ETF).

Based on the partnership they reached, BNY Mellon bank would start handling accounting and administrative services for the Grayscale Bitcoin Trust (GBTC) starting from October 1. Grayscale will use BNY Mellon for ETF services upon the hoped-for conversion of its$21.5 billion GBTC, according to Bloomberg, citing a statement Tuesday.

Michael Sonnenshein, the CEO of Grayscale Investments, said that such roles are currently done in-house. “Our business has been undertaking any and all initiatives we possibly can to ready this product for an ETF conversion,” Sonnenshein said in an interview with Bloomberg.

The crypto firm also said that Mellon bank would offer transfer agency and ETF services once the Bitcoin trust is converted into an ETF. Such a product would require various backend services in which the deal solicits the bank to offer such key functions for the crypto company.

The latest announcement by Grayscales comes just 24 hours after the firm got approval from the US SEC for its diversified crypto fund (Digital Large Cap fund), thus making the fund an SEC reporting company.

Grayscale Digital Large Cap Fund would now file its financial statements and other reports with the SEC, including compliances with all other obligations enshrined under the Securities Exchange Act. The announcement made the crypto firm a step closer towards commitments to convert its Bitcoin trust to America’s first Bitcoin ETF.

In recent months, BNY Mellon has also become actively involved in the crypto industry. In February, the bank started providing Bitcoin custody services to its clients.

Meanwhile, nearly 40,000 Bitcoins worth in Grayscale Bitcoin Trust are unlocking this week, which may impact the crypto market. An analyst commented if GBTC would be Bullish or Bearish for the Bitcoin market. Ulrik K.Lykke, an executive director of ARK36, said:

“In theory, the unlocking of GBTC shares should not have any direct effect on the Bitcoin spot market. However, if all investors holding the currently locked-up shares rushed to exit their investment at the end of this lockup and started mass selling their shares, it would likely exert downward pressure on the BTC price.”

Crypto ETFs Facing Hurdles

Grayscale first applied for a Bitcoin ETF in 2016 but spent the rest of 2017 engaging in conversations with the SEC. The company eventually withdrew its application because it believed that the regulatory landscape for crypto assets had not advanced to a point where such products could be approved for the market.

But since the regulatory environment has changed, the crypto firm is once again making moves towards a Bitcoin ETF.

Grayscale is among many companies in the crypto market planning to get Bitcoin ETF approval from the US regulators. At least nine other firms have submitted applications, including Fidelity Investments, Galaxy Digital Holdings Ltd, etc. So far, the SEC has not approved any Bitcoin ETF in the US due to concerns about market manipulation and volatility associated with cryptocurrencies.

Grayscale Hires Former Alerian CEO Davi LaValle As Global Head of ETFs

Grayscale Investments has hired Davi LaValle, the former CEO of energy and infrastructure index provider Alerian, as its ETF chief.

Mr. LaValle will be the senior managing director and global head of ETFs at Grayscale Investments. He will lead efforts by Grayscale, which recognises itself as the world’s largest digital currency asset management firm, to convert its suits of products into exchange-traded funds.

In March, LaValle’s hires follow job listings posed by Grayscale, which suggested that the New York-based company was planning an ETF business.

Before Lavelle served as the chief executive at Alerian energy infrastructure market intelligence company, he worked in several stock exchanges, helped develop best performing ETFs at the Nasdaq stock market, and chaired a division of State Street’s exchange-traded funds business as the head of the bank’s capital markets team.

ETF Applications Mushrooming

The new hire will help Grayscale Investments convert its GBTC into an ETF.

In April, the US investment company responsible for $34.5 billion in assets under management sighted the need to turn its Grayscale Bitcoin Fund into a Bitcoin Exchange-Traded Fund as soon as possible.

During that time, Grayscale confirmed its plan to re-apply with the U.S Securities and Exchange Commission (SEC) to offer an ETF after previous failed attempts to get approval.

The New York-based firm launched its Grayscale Bitcoin Trust in 2013. The investment vehicle has been the go-to option for investors who want Bitcoin exposure to their portfolios without directly purchasing the crypto asset.

Grayscale first applied for a Bitcoin ETF in 2016 but eventually withdrew its applications after determining that the regulatory environment could not authorise a Bitcoin ETF.

Last month, Grayscale revamped its ETF ambitions through a new deal with Bank of New York Mellon Corporation as its ETF services provider.

Other US firms include Fidelity Investments, Anthony Scaramucci-led SkyBridge Capital firm, WisdomTree Investments, Valkyrie Digital Assets, NYDIG asset management firm, and VanEck Associates Corp have applied. They are still waiting for approval from the US regulators to offer Bitcoin ETFs.

However, it is not known when the SEC will approve a crypto ETF in the US. But market participants believe that multiple Bitcoin ETF approvals in Canada this year may spur US regulators to approve such crypto ETFs.

Digital Currency Group Lands $600M Debt Funding

Grayscale Investments’ parent company Digital Currency Group (DCG) said it has secured a $600 million credit funding, billed to power its many diverse operations.

As announced by the company, Eldridge led and served as the administrative agent of the credit facility, and amongst the lenders and funds which bankrolled the facility includes Capital Group, Davidson Kempner Capital Management, and Francisco Partners. The credit facility will allow the DCG to draw any amount at any time as it looks to bolster its operational capabilities across the board.

“This financing strengthens our ability to respond dynamically to opportunities in the market,” said DCG Founder and CEO Barry Silbert. “We’re very pleased to partner with this cohort of high-quality institutional lenders and, as a profitable and rapidly growing company, we are fortunate to be able to access this growth financing with an attractive cost of capital.”

Beyond Grayscale Investments has more than $50 billion in Assets Under Management (AUM) and DCG is also the parent company to outfits including Genesis, TradeBlock, Luno, Foundry, and Coindesk.

According to the firm, the better part of the funding will be used to bankroll these agencies amidst an ongoing surge in demand in crypto-related services from both retail and institutional investors.

“We’ve solidified our premier market position in recent years through the development and growth of our diversified subsidiaries, continued expansion of our investment portfolio, and via acquisitions,” said DCG CFO Michael Kraines. “This debt financing is an important milestone to ensure DCG continues to play a leading role in the financing and development of this remarkably dynamic sector.”

Earlier this month, the Digital Currency Group raised $700 million from a secondary share sale, capitalizing on the growing desire of hedge funds to bet on promising crypto-focused entities. Through the new funding round, the Digital Currency Group and its subsidiaries will look to extend their position as a leader in the blockchain ecosystem.

Digital Currency Group Announces $250M Share Buyback from Crypto Trusts

Digital Currency Group (DCG), the parent company of Grayscale Investments, has announced a new share buyback program projected to be worth $250 million.

As revealed by the company, the buyback program will feature a wide range of the company’s trust products with the first buyback covering up to $50 million in total for shares of Grayscale Litecoin Trust ($30 million), Grayscale Horizen Trust, and Grayscale Zcash Trust.

According to Grayscale, as much as $200 million will also be invested in buyback programs for its other six publicly quoted Grayscale products. These include the Grayscale Bitcoin Cash Trust, the Grayscale Bitcoin Trust, Grayscale Large Cap Fund, Grayscale Ethereum Classic Trust, Grayscale Ethereum Trust, and Grayscale Stellar Lumen Trust.

While the timeline for the share buyback is yet unknown, the company said the move will complement the earlier approvals it has received to purchase shares of GBTC and ETCG, of which DCG respectively has $301.3 million and $4.5 million in authorized share repurchases remaining. The company said the share buyback will be carried out using cash on hand as the company’s management will decide based on its discretion.

The decision to buy back the six core products is perhaps influenced by the valuation plunge of the premium of these products as showcased from the data from otcnode. While the negative premium is all-encompassing, the Grayscale Ethereum Classic Trust is recording the worst plunge at -59.46% at the time of writing.

Amidst the business modifications, Grayscale has considered thus far the plan to convert the Bitcoin Trust into a full-fledged spot Exchange Traded Fund (ETF) product. While the application has been filed with the United States Securities and Exchange Commission (SEC), no feedback has been received yet.

That the SEC continues to reject other competitors’ applications for a spot Bitcoin ETF has casted doubts on the chances of Grayscale succeeding, however, time is the main determining factor to get the needed closure in relation to the company’s ambition in attracting institutional investors.

Grayscale Files Form 10 with SEC for its 3 Trusts

Grayscale Investments announced on Thursday that it has publicly filed a Registration Statement on Form 10 with the Securities and Exchange Commission (SEC) on behalf of Grayscale® Horizen Trust, Grayscale® Stellar Lumens Trust, and Grayscale® Zcash Trust.

The new Form 10 filings are voluntary and subject to SEC review. If the SEC considers the Registration Statements filed today as effective, then it would designate the trusts (funds) as Grayscale’s investment vehicles to become SEC reporting companies and register their shares, according to Section 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange Act).

This means that accredited investors who buy shares in the Funds’ private placements would have an earlier liquidity opportunity, as the statutory holding period of private placement shares would be reduced from 12 months to six months under Rule 144 of the Securities Act of 1933.

If the registration statements become effective, then the funds would file quarterly and annual reports, current reports, and audited financial statements with the SEC, including complying with all other obligations under the Exchange Act.

The Trust is a traditional investment product that provides investors with exposure to cryptocurrency in the form of security, thus avoiding the challenges of buying, storing, and safekeeping crypto directly.

The funds are investment products that allow investors to more effectively implement strategic and tactical asset allocations that incorporate digital assets by using the funds’ shares. The move reflects Grayscale’s commitment to move such funds forward through the product pipeline highlighted in the company’s roadmap to launching digital currency ETFs.

The firm, a New York-based premier digital currency investing and crypto asset management company, already has six SEC reporting products: Grayscale® Bitcoin Trust, Grayscale® Bitcoin Cash Trust, Grayscale® Digital Large Cap Fund, Grayscale® Ethereum Trust, Grayscale® Ethereum Classic Trust and Grayscale® Litecoin Trust.

Grayscale has plans to continue to release new funds to offer diversified exposure to additional cryptocurrencies. The firm still seeks to launch a Bitcoin Spot ETF that has been rejected by the SEC.

Grayscale is aware that Stellar lumen (XLM), Zcash (ZEC), and Horizen (ZEN) are some of the potential cryptocurrencies with good investment opportunities for customers.

Grayscale Files for Three New Crypto ETFs

Grayscale Investments, the cryptocurrency asset manager, is seeking approval from the United States Securities and Exchange Commission (SEC) for three new cryptocurrency-focused exchange-traded funds (ETFs). The new funds include a Bitcoin Composite ETF, an Ethereum Futures ETF, and a Privacy ETF.

Grayscale’s Bitcoin Composite ETF will invest in exchange-traded products related to or backed by Bitcoin, including Bitcoin mining firms. The Ethereum Futures ETF, on the other hand, will offer indirect exposure to the potential future value of Ether through shares that track ETH’s price. The Grayscale Privacy ETF will invest in companies working on blockchain-based privacy technology.

Despite previous roadblocks from the SEC over crypto-related ETFs, Grayscale has filed a registration statement for the new ETFs. However, until the registration statement is approved, the funds will not be available for public purchase.

Grayscale also announced the launch of the Grayscale Funds Trust, a new arm of its business that allows it to manage many of its publicly traded financial products in-house. This move indicates the company’s growing confidence in its ability to manage its funds internally.

While Grayscale continues to navigate a conflict with the SEC over converting its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product, the company remains optimistic about the future of crypto ETFs. In January 2021, Grayscale sued the SEC for denying its application, arguing that the SEC acted unfairly in treating crypto spot traded exchange-traded products differently from futures products. Grayscale claims that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market.

Despite the SEC’s approval of several Bitcoin Futures ETFs, it has so far rejected every application for a spot Bitcoin investment product due to concerns about exposing investors to potential fraud and market manipulation. However, Grayscale’s move to launch new crypto ETFs and manage its publicly traded financial products in-house demonstrates the company’s commitment to the cryptocurrency market and its belief in the long-term potential of digital assets.

In conclusion, Grayscale Investments’ filing of three new cryptocurrency-focused ETFs and the launch of its Grayscale Funds Trust is a significant step forward for the company and the cryptocurrency market as a whole. While the SEC’s approval of these new ETFs is still pending, Grayscale’s continued efforts to introduce crypto-focused investment products is a positive sign for the industry’s growth and adoption.

Grayscale Launches New Entity to Manage Growing Funds

Grayscale Investments, the cryptocurrency asset manager, has announced the launch of a new entity, the Grayscale Funds Trust, to manage its publicly traded financial products in-house. The move indicates the company’s growing confidence in its ability to manage its funds internally.

In addition to the launch of the new trust, Grayscale has filed a registration statement with the United States Securities and Exchange Commission (SEC) for three new cryptocurrency-focused exchange-traded funds (ETFs). The new funds include a Bitcoin Composite ETF, an Ethereum Futures ETF, and a Privacy ETF.

Grayscale’s Bitcoin Composite ETF will invest in exchange-traded products related to or backed by Bitcoin, including Bitcoin mining firms. The Ethereum Futures ETF will offer indirect exposure to the potential future value of Ether through shares that track ETH’s price. The Grayscale Privacy ETF will invest in companies working on blockchain-based privacy technology.

However, until the registration statement is approved by the SEC, the funds will not be available for public purchase. This move comes as Grayscale continues to navigate a conflict with the SEC over converting its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product.

In January 2021, Grayscale sued the SEC for denying its application, arguing that the SEC acted unfairly in treating crypto spot traded exchange-traded products differently from futures products. Grayscale claims that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market. Despite the SEC’s approval of several Bitcoin Futures ETFs, it has so far rejected every application for a spot Bitcoin investment product due to concerns about exposing investors to potential fraud and market manipulation.

Despite these challenges, Grayscale’s move to launch new crypto ETFs and manage its publicly traded financial products in-house demonstrates the company’s commitment to the cryptocurrency market and its belief in the long-term potential of digital assets.

In conclusion, Grayscale Investments’ launch of the Grayscale Funds Trust and its filing of three new cryptocurrency-focused ETFs is a significant development for the company and the cryptocurrency market as a whole. While the SEC’s approval of these new ETFs is still pending, Grayscale’s continued efforts to introduce crypto-focused investment products is a positive sign for the industry’s growth and adoption.