Can GrayScale’s Proposed Launch of “Mini GBTC” with Industry’s Lowest Management Fee of 0.15% Attract Capital Inflow?

Cryptocurrency asset management company GrayScale submitted an application to the SEC last month, planning to issue a mini version of the GrayScale Bitcoin Spot ETF. According to estimated financial statements, this ETF will charge a management fee of 0.15%, which is lower than all other Bitcoin spot ETFs and is expected to make GrayScale products more competitive.
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GrayScale submitted an application to the U.S. Securities and Exchange Commission (SEC) last month, seeking to issue a mini version of the GrayScale Bitcoin Spot ETF called “Bitcoin Mini Trust” (BTC), and according to the latest financial statements submitted by GrayScale, this ETF will charge a management fee of 0.15%, which is lower than all current Bitcoin spot ETFs.
The GrayScale GBTC currently charges a management fee of up to 1.5% and continues to experience net outflows of funds. According to the latest documents, when the mini version of GBTC is launched, GrayScale will inject 10% of GBTC’s assets into the fund, and the shares of the mini version of GBTC will be automatically issued and distributed to GBTC shareholders.
According to a report by Coindesk, the mini version of GBTC aims to provide GBTC investors with an option with lower management fees, and its fees are more competitive than other Bitcoin spot ETFs approved in January of this year. Currently, the lowest-cost Bitcoin spot ETF is Franklin’s EZBC, with a management fee of 0.19%.
The report mentioned that for GBTC investors, the split is considered a tax-free event, and these investors can automatically transfer their existing shares to the new fund without paying capital gains tax. This is quite advantageous for early GBTC investors who have thousands of times in floating gains. If they want to sell their existing GBTC and switch to other competing products with lower management fees, they will face considerable capital gains tax.
Eric Balchunas, senior ETF analyst at Bloomberg, reminded that the financial statements released by GrayScale are estimated, so the management fees of the mini version of GBTC are just estimated assumptions. But the good news is that GrayScale is aware that people are paying attention, so they chose the extremely low number of 0.15%.
GBTC has seen a net outflow of $16.7 billion
According to data from SoSoValue, since GBTC became a Bitcoin spot ETF in January of this year, there has been a net outflow of up to $16.7 billion so far. Currently, GBTC’s managed assets have fallen to about $19.6 billion, while its largest competitor, BlackRock’s IBIT, has seen a net inflow of $15.4 billion, with managed assets growing to about $17.6 billion.


Image source: SoSoValue
If the mini version of GBTC can be launched, it is expected to restore the competitiveness of GrayScale products. Nate Geraci, President of ETF Store, said that this is a positive factor for GrayScale, and GrayScale can even consider setting the management fee for the mini version of GBTC at an even lower 0.1%. He pointed out that if GBTC maintains a management fee of 1.5%, its asset size will gradually decline over time.


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