$MCADE presale is now live!

Grayscale CEO confirms tender offer if Bitcoin ETF path fails

By:
on Dec 19, 2022
Listen to this article
  • Grayscale will consider a 20% tender offer to investors if unsuccessful in spot Bitcoin ETF.
  • The firm wants to convert its flagship Bitcoin Trust (GBTC) into a spot Bitcoin ETF but SEC has rejected it.
  • Grayscale is owned by Digital Currency Group, a crypto-focused firm that also owns the troubled Genesis Global

Grayscale Investments will look to return 20% of Grayscale Bitcoin Trust (GBTC) fund to investors if its bid to have a spot Bitcoin ETF fails.

The company will explore this option should its battle to have the Securities and Exchange Commission (SEC) approve its application to convert GBTC into spot bitcoin ETF fail. That’s the message Grayscale CEO Michael Sonnenshein gave to investors via an end-of year letter on Monday.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The SEC has rejected Grayscale’s proposal to convert GBTC to an ETF already this year, with the regulator’s actions seeing the investment firm file a lawsuit.

On Monday, Sonnenshein said the company was 100% committed to pushing for an approval, noting that this remains a route that would best benefit investors. On what happens next if the firm losses the legal challenge against the SEC, the Grayscale CEO noted:

“We remain confident that the D.C Court of Appeals will agree with our strong, common sense, and compelling legal arguments, but we also appreciate investors’ interest in what happens to GBTC if the courts do not rule in our favor.”

Grayscale won’t dissolve GBTC

Grayscale will consider a tender offer to return a percentage of the GBTC capital to shareholders, he added. However, this path is an option if the asset manager exhausts all options in applicable courts, as well as determine that there’s no further openings with regard to possible legislative and regulatory avenues.

According to Sonnenshein, the tender offer would be for 20% of GBTC outstanding shares. To achieve this, Grayscale will need approval from the SEC for certain reliefs, as well as shareholder approval. The firm does not plan to dissolve GBTC even if it fails in its quest for a tender offer.

GBTC is trading at a huge discount to the net asset value (NAV), currently at 49% as the company navigates solvency concerns around parent-firm Digital Currency Group.

Grayscale’s exposure to the struggling crypto broker Genesis Global has also been a massive source of jitters, with crypto concerned an unwinding of GBTC would massively impact the price of Bitcoin.