Grayscale mulls spot Bitcoin ETF spinoff

Bitcoin ETF spinoff: Grayscale Investments is considering a spin-off of its spot Bitcoin exchange-traded fund (ETF), the Grayscale Bitcoin Trust (GBTC), which has been trailing behind its competitors in recent months, the company announced on Tuesday.

The higher fees associated with GBTC have been cited as a significant factor attracting investors to rival ETFs, as reported by Reuters.

According to data from crypto research firm BitMEX Research, GBTC has experienced capital outflows of $11.05 billion since January, despite Bitcoin reaching an all-time high and other competitors seeing inflows during the same period.

To execute the spin-off, Grayscale has filed to list shares of a new investment product named the Grayscale Bitcoin Mini Trust. This new trust will receive a certain amount of Bitcoin held by GBTC, with current GBTC shareholders receiving stock in the Mini Trust in exchange, the company stated.

Grayscale has not yet determined the fees that the Mini Trust will charge, as per the filing. Following the spin-off, both GBTC and the Mini Trust will operate independently.

The company's recent legal victory against the Securities and Exchange Commission (SEC) paved the way for the approval of spot bitcoin ETFs in January. These investment vehicles allow shareholders to gain exposure to bitcoin without directly holding it.

Since receiving approval, competitors such as BlackRock's iShares Bitcoin ETF and Fidelity Wise Origin Bitcoin Fund have recorded inflows of $10.59 billion and $6.37 billion, respectively.

The excitement surrounding ETFs and expectations of a potential interest rate cut by the Federal Reserve have contributed to Bitcoin's surge above $72,000, making it the world's largest cryptocurrency by market capitalisation.

(With Reuters inputs)