Grayscale Initiates Significant Amendments To GBTC Trust Agreement

The world’s largest crypto asset management company, Grayscale, has recently made a few significant adjustments to its Grayscale Bitcoin Trust (GBTC) agreement for the first time in five years, signaling a strategic shift.

Grayscale Adjustments To The Agreement Governing Its GBTC

On Wednesday, November 29, Grayscale submitted a consent solicitation statement in an effort to amend the trust agreement governing the Grayscale Bitcoin Trust (GBTC) with the assets of shareholders. 

A Grayscale spokesman stated:

Today, Grayscale has outlined proposed amendments to GBTC’s Trust Agreement that are intended to provide operational efficiencies that we believe are beneficial to both Grayscale and GBTC. Importantly, this is in our normal course of business, and GBTC remains ready to uplist as a spot Bitcoin ETF to NYSE Arca upon appropriate regulatory approvals.

The aim is to enhance the GBTC framework in preparation for a potential turn to a spot Bitcoin exchange-traded fund (ETF). As a result of this, it will ensure equitable competition with other competitors, possibly including BlackRock, a well-known asset management firm.

According to the Wednesday filing, two main adjustments were made in the agreement. These include a change in the collection of fees and consolidation of assets into an all-inclusive account structure.

The first proposal would allow the fund fees to be paid on a monthly basis to a daily basis. This shift is a structural improvement rather than a charge reduction as Grayscale had affirmed. It will not change the fee amount, but just the payment frequency.

The filing read:

With the changes we are seeking, the Sponsor’s Fee would be payable daily in arrears and the Sponsor will maintain the discretion to instruct the Custodian to withdraw Bitcoin from the Bitcoin Account equal to the accrued but unpaid Sponsor’s Fee.

Currently, the firm charges a 2% management fee on GBTC. Meanwhile, companies waiting for approval of a spot Bitcoin ETF typically charge between 0.7% and 1% in fees. 

The second proposal will make it possible for some trust assets to be retained in omnibus accounts in the short term. This will enable more effective share creation and redemption, as it is an important function for the operation of the Bitcoin ETF. 

Shareholders To Vote For Approval Of The Proposals

Grayscale has decided that stockholders will have to vote in favor of both propositions. While not necessary, the adjustments could result in improved operational efficiency and a possible conversion of the GBTC spot ETF.

In order to execute the suggested proposals, the company will not impose any extra expenses on its shareholders. The shareholders have been given 20 days to cast their votes in relation to the suggested proposals.

“GBTC shareholders will not pay any additional fees as a result of the proposed amendments. The board of directors of Grayscale Investments, LLC recommends that you vote “FOR” the two proposals,” the filing said.