Tennessee-based asset management firm Valkyrie Investments has announced its intention to become a new sponsor of Grayscale’s Bitcoin Trust (GBTC). The company says it is “uniquely qualified” for the role and plans to facilitate redemptions at net asset value (NAV) through Regulation M filings.
Valkyrie proposes to take over management of Grayscale Bitcoin Trust
Grayscale Bitcoin Trust (GBTC) faced a challenge in 2022. Discounts to fund net asset value (NAV) have reached record levels. Over the past six months, the spread between the fund’s value and NAV has increased by more than 35% by the end of September 2022. As of December 30, 2022, the discount has further expanded to over 45%.. This means that the Bitcoin Fund is worth less than the current BTC spot price. Valkyrie hopes to remedy the situation by taking over the sponsorship and creating another fund.
“With the launch of GBTC, we understand that Grayscale has played an important role in the development and growth of the Bitcoin ecosystem, and we salute the team and the work they have done.” ‘, he writes Valkyrie .. “However, in light of recent events involving Grayscale and its family of affiliates, it is time for a change. It’s the right company.”
Fund managers said Friday they will launch the Valkyrie Opportunistic Fund, a venture aimed at taking advantage of discounts on GBTC’s net asset value. According to Valkyrie, the team will be able to increase its GBTC holdings and ultimately demonstrate “the true value of underlying Bitcoin to investors”.At the time of writing, Grayscale managed Bitcoin Trust. holds approximately 643,572 BTC.
Following the announcement, Eric Balchunas, a senior Bloomberg ETF analyst,commented on Valkyrie’s intentions. “Valkyrie is launching the Valkyrie Opportunistic Fund to become a new sponsor of GBTC (which trades at a 50% discount) and to facilitate redemption with a 75bps fee at NAV,” Balchunas said. “No prospects, but speaks to growing pressure.”
In the announcement, Valkyrie put forward three proposals:
- Timely Regulation M filings facilitate orderly redemptions at net asset value (NAV) for all willing investors. This ensures that all investors have the option to redeem their shares at a fair price without delay or impediment.
- Lower rates to more equitable levels in line with industry best practices. We propose a fee of 75 basis points, significantly lower than the current 200 basis points.
- Attempts to offer investors redemption in both Bitcoin and cash. This gives investors greater flexibility and choice regarding the redemption of their shares.
Valkyrie’s offer comes at a time when Grayscale’s parent company, Digital Currency Group (DCG), is having trouble with its subsidiary, Genesis Global Capital. In mid-November, Genesis’ lending department suspended withdrawals and the initiation of new loans on its platform. Genesis is reportedly owing $900 million to cryptocurrency exchange Gemini, which has formed a committee with financial advisor Houlihan Lokey to collect the funds.
Additionally, Gemini could face a class action lawsuit from two of her investors regarding the company’s Gemini Earn program. Despite speculation, a letter from CEO Barry Silbert to his DCG shareholders states that the company “will continue to be a leading builder in the industry.” At the time of writing, Grayscale or his DCG have not responded to his Valkyrie’s offer to become his new GBTC sponsor.
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