Michael Sonnenshein, CEO, Grayscale Investments at the NYSE, April 18, 2022.
Source: NYSE
LONDON — The boss of digital asset management firm Grayscale, which manages the $26 billion exchange-traded fund GBTC, has said that fees on its flagship product will come down over time,after its outflows reached $12 billion.
Grayscale CEO Michael Sonnenshein said that the crypto fund manager expects to bring fees on its Grayscale Bitcoin Trust ETF down in the coming months, as the nascent crypto ETF market matures.
"I'll happily confirm that, over time, as this market matures, the fees on GBTC will come down," Sonnenshein told CNBC in an interview on Monday.The firm previously defended its costlier-than-market-average charges.
"We have seen this in countless other exposures, countless other markets, you name it, where typically when products are earlier in their lifecycle, when they're new to be introduced, these [fees] tend to be higher. And, as those markets mature, and as those funds grow, those fees tend to come down, and we expect the same to be true of GBTC."
GBTC has logged outflows of more than $12 billion since it was converted into an ETF in early January,accordingto data from crypto investment firm CoinShares,due in no small part to its higher-than-average fees.
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CoinShares' data shows that GBTC recorded its biggest single daily outflow on Monday, with withdrawals totalling $643 million.
"Of course, we anticipated having outflows," Sonnenshein told CNBC. "Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation."
Market commentators argue that the bankruptcy of crypto giant FTX has played a significant role in the selloff of GBTC. FTX was a major holder of GBTC before it filed for insolvency in November 2022, holding about 22 million shares as of Oct. 25.
The FTX bankruptcy estate reportedly offloaded the majority of its shares in Grayscale's bitcoin ETF, according to January reporting from Bloomberg and CoinDesk.
"None of that came as a surprise, right," Sonnenshein said, speaking about the outflows. "What we've seen is GBTC continue to trade liquidly with tight spreads, and across a very diversified shareholder base. So we kind of think we're between the first and the second inning of this."
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"We're kind of at the end of that first inning now, where the pent-up demand for buying has hopefully been satisfied, the pent up demand for selling has also hopefully been satisfied," Sonnenshein added.
"And now we're kind of starting to move towards that second and third inning, where there's so much more of the market that still is not yet accessing these products."
The crypto fund manager charges a 1.5% management fee for GBTC holders, significantly higher than the charge commanded by many ETF providers, including BlackRock and Fidelity.
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VanEck has waived fees for investors entirely until March 2025 in a bid to lure in deposits.
Grayscale's Sonnenshein defended the firm's high fees at the time, telling CNBC they were justified by GBTC's liquidity and track record. He said that the reason other ETFs have lower fees is that their products "don't have a track record," and the issuers are trying to lure investors with fee incentives.
Sonnensheinsaid the reason other ETFs have lower fees is that the products "don't have a track record" and the issuers are trying to attract investors with fee incentives. "I think from our standpoint, it may at times call into question their long-term commitment to the asset class," he said.
Sonnenshein told CNBC Monday that "all of these new issuers really came into the market to compete with us" and are also rivaling each other.
Grayscale also wants to introduce other ways of giving investors less costly ways of accessing its bitcoin ETF, including a "mini" version of its flagship product — the Grayscale Bitcoin Mini Trust, announced last week. The new ETF is set to trade under the ticker "BTC" and have a materially lower fee than GBTC.
The new BTC ETF would be effectively spun out of the Grayscale Bitcoin Trust ETF and seeded with an as-yet undisclosed portion of bitcoin underlying GBTC shares.
Under this structure, existing holders of GBTC would be able to benefit from a lower total blended fee while maintaining the same exposure to bitcoin, spanning ownership of shares of both GBTC and BTC.
Existing GBTC shareholders would also be able to convert into BTC without paying capital gains tax.
The firm is currently awaiting approval from the U.S. Securities and Exchange Commission for its Bitcoin Mini Trust ETF.
Moving forward, Sonnenshein wants investors to turn their attention toward the business' other crypto investment products, which track prices of different cryptocurrencies including ether and solana.
The company is trying to have its Grayscale Ethereum Trust converted into an ETF, but is awaiting SEC approval.
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Correction: This story has been amended to reflect that VanEck waived fees on its bitcoin ETF until March 2025. An earlier version misstated the name of the company.
FAQs
Grayscale CEO says fees on its bitcoin ETF will drop over time after outflows hit $12 billion. Grayscale's CEO Michael Sonnenshein told CNBC on Monday that fees on its flagship bitcoin ETF will come down over time, softening an earlier stance defending costs above the market average.
Will GBTC reduce fees? ›
Grayscale's flagship Bitcoin (BTC) exchange-traded fund (ETF) will drop its fees, the highest of all United States spot Bitcoin ETFs, but only once the products “start to mature,” according to CEO Michael Sonnenshein.
What is the fee for Grayscale BTC ETF? ›
Now, Grayscale is launching a spinoff version of GBTC, which will have a much lower fee of 0.15% vs. 1.5% for GBTC. The new ETF, Grayscale Bitcoin Mini Trust (BTC), will have the lowest fee among all spot bitcoin ETFs.
What is the outflow of Grayscale Bitcoin Trust? ›
Grayscale has seen outflows of about $17.4 billion since the ETF was converted from a trust in January, according to data compiled Bloomberg, as some investors appear to have shifted assets from GBTC into new, lower-cost funds offered by companies such as BlackRock and Fidelity.
Will Grayscale planned mini Bitcoin ETF have a 0.15% fee the lowest among spot Bitcoin ETFs? ›
Grayscale's Planned Mini Bitcoin ETF Will Have a 0.15% Fee, the Lowest Among Spot Bitcoin ETFs. Grayscale's new ETF product, the Bitcoin Mini Trust, has set fees at 0.15%. Grayscale said it will contribute 10% of Grayscale Bitcoin Trust (GBTC) assets to the Bitcoin Mini Trust (BTC).
What is the forecast for Grayscale ETF? ›
Grayscale Bitcoin Trust is forecasted to trade within a range of $ 62.12 and $ 301.34. If it reaches the upper price target, GBTC could increase by 390.15% and reach $ 301.34.
Why does GBTC have so many outflows? ›
GBTC outflows are occurring due to high fees and ETF competition.
Why is Grayscale not lowering fees? ›
Grayscale's Sonnenshein defended the firm's high fees at the time, telling CNBC they were justified by GBTC's liquidity and track record. He said that the reason other ETFs have lower fees is that their products "don't have a track record," and the issuers are trying to lure investors with fee incentives.
What are GBTC annual fees? ›
This chart estimates the total revenue Grayscale is generating from GBTC and ETHE. The calculation is based on the value of the total USD holdings each month multiplied by Grayscale's fees. GBTC had a 2% annual fee when it was a trust which was lowered to 1.5% when it became an ETF, and ETHE has a 2.5% annual fee.
Is it safe to invest in Grayscale Bitcoin Trust? ›
As GBTC's sponsor since inception, Grayscale is one of the only asset managers with a decade of experience operating a Bitcoin investment vehicle that is regulated by the U.S. Securities Exchange Commission.
The Trust is a grantor trust for U.S. federal income tax purposes. As a result, the Trust itself is not subject to U.S. federal income tax. Instead, the Trust's income and expenses “flow through” to the Shareholders.
How many people are in the Grayscale Bitcoin Trust? ›
Grayscale Bitcoin Trust (GBTC) holds 286,968.9 BTC as of May 30, 2024. (1).
Do you have to hold GBTC for 6 months? ›
Post a six-month lockup period, investors can retain or sell their shares to retail investors on the secondary market. GBTC shares on the secondary market, identified by the ticker symbol GBTC, frequently trade at a premium influenced by investor demand.
Is GBTC or BITO better? ›
BITO is preferable for those seeking an ETF structure with lower fees and indirect exposure to Bitcoin via futures, while GBTC suits investors seeking direct exposure to Bitcoin's price movements despite potentially higher fees and the risk of trading at premiums or discounts.
Does Grayscale have a Bitcoin ETF? ›
The Grayscale Bitcoin Trust (GBTC) allows investors to access bitcoins through a traditional investment vehicle. Initially launched in 2013, the trust was available only in OTC markets. After many regulatory battles, the SEC approved Grayscale's application to turn the trust into an ETF in January 2024.
Is GBTC a good buy? ›
GBTC Signals & Forecast
The Grayscale Bitcoin Invt Tr stock holds buy signals from both short and long-term Moving Averages giving a positive forecast for the stock. Also, there is a general buy signal from the relation between the two signals where the short-term average is above the long-term average.
Does Grayscale Bitcoin Trust pay dividends? ›
Grayscale Bitcoin Cash Trust (BCH) (BCHG) does not pay a dividend.
What cryptos does Grayscale hold? ›
Supported Cryptocurrencies
- Bitcoin.
- Bitcoin Cash.
- Ethereum.
- Ethereum Classic.
- Litecoin.
- Stellar.
- XRP.
Top Mutual Fund Holders
| Holder | # of Shares | Type |
|---|
| Morgan Stanley Variable Insurance Fund Inc. | 297,124 | Institution |
| 360 Funds | 10,000 | Institution |
| U.s. Global Investors Funds | 1,100 | Institution |
| Kinetics Mutual Funds | 60 | Institution |
2 more rowsInstitutional Ownership and Shareholders
Grayscale Bitcoin Trust (BTC) (US:GBTC) has 653 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 76,779,274 shares.
Bankrupt Genesis Sold GBTC Shares to Acquire 32,041 Bitcoin.
How is GBTC treated for tax purposes? ›
The IRS categorizes capital gains from GBTC shares based on holding periods. While holding GBTC shares within the trust structure defers taxes, the ETF conversion may trigger capital gains taxes.
Is GBTC a good investment now? ›
GBTC Signals & Forecast
Since the short-term average is above the long-term average there is a general buy signal in the stock giving a positive forecast for the stock. On further gains, the stock will meet resistance from the short-term Moving Average at approximately $61.82.
How can I reduce my Bitcoin fees? ›
Time your transactions: Send transactions during periods of lower network congestion to save on fees. Adopt scaling solutions: Layer 2 solutions, like the Lightning Network, which handles smaller transactions off the main blockchain, can alleviate congestion and reduce fees in the long run.
