Grayscale Investments

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Grayscale Investments
Grayscale logo.png
Founded 2013
Headquarters New York, New York
Key People Barry Silbert, founder & CEO
Employees 2-10
Products Bitcoin investment trust
Twitter @grayscaleinvest
LinkedIn Profile
Facebook grayscaleinvestments
Website GBTC Home
Releases Company News


Grayscale Investments is a company that manages cryptocurrency investment funds. It is a subsidiary of the Digital Currency Group, which also owns the cryptocurrency news and digital media company Coindesk.[1]

History

Grayscale Investments was created in 2013 by the Digital Currency Group.[2]

In March 2017, Grayscale managed $208 million worth of investments in the Grayscale Bitcoin Investment Trust. By March 2018, the company had created investment trusts for Ethereum, Litecoin, XRP, Bitcoin Cash, and Zcash in addition to bitcoin. By that time, Grayscale was managing more than $2.1 billion in cryptocurrency investment trusts.[3][4] The company launched an investment trust for Zen, a privacy-focused digital currency similar to Zcash, in June 2018.[5] The following month, it launched an investment trust for Ethereum Classic.[6]

According to Grayscale, 56 percent of the money it raised in the first half of 2018 came from institutional investors, 20 percent from accredited individual investors, 16 percent from retirement investors, and 8 percent from family investments.[7]

Grayscale announced in a November 19, 2019 blog post that it had applied to the U.S. Securities and Exchange Commission (SEC) for the Bitcoin Investment Trust to be designated an SEC reporting company and to register its shares pursuant to Section 12(g) of the Securities Act. The company notes that, if approved, the trust would report financial results according to SEC standards. The blog post also stated that approval would not make the shares in the trust eligible for trading on an exchange, as if it were an ETF.[8]

Bitcoin price plummets

By October 2018, the price of shares for the Grayscale Bitcoin Investment Trust (GBTC) had gone down 80 percent. Investors cited bitcoin's huge price decrease since December 2017, as well as GBTC's high fees, as the cause. (GBTC charges investors $20 for every $1000 invested, or 2 percent. Some consider this to be too high; according to the Investment Company Institute, the average equity mutual fund expense ratio was around 0.59 percent in 2017).[9][10]

Products and services

Grayscale Investments manages a number of investment trusts, which it refers to as private "investment vehicles," for large amounts of bitcoin, Bitcoin Cash, Ether, Ethereum Classic, Litecoin, Horizen, XRP, Zcash, and Stellar Lumens. Grayscale also manages the Grayscale Digital Large Cap Fund, a market cap-weighted fund consisting of a basket of the biggest cryptocurrencies by market cap (bitcoin, Ether, XRP, Bitcoin Cash, and Litecoin) using several digital asset reference rates - TradeBlock XBX, ETX, XRX, BCX, and LTX Index 24-hour VWAPs. These trusts, or "vehicles" are passive investment funds, which track the prices of each digital asset in real-time using digital trade algorithms. GBTC specifies on its website that only "accredited investors as defined under Regulation D of the Securities Act of 1933" are permitted to invest in any of their investment vehicles.[11][12]

Grayscale Investments announced that it would be adding support for Stellar through the "Stellar Lumens Trust" in January 2019.[13] In May 2019, FINRA approved Grayscale's proposal to publicly list shares for an Ethereum-based trust, making it the first publicly-quoted security tied to Ethereum. Grayscale planned on launching trading for shares of the trust under the ticker ETHE sometime in early June 2019.[14]

Custody

Grayscale announced on August 2, 2019, that it had selected Coinbase Custody to serve as the custodian for the digital assets underlying its products.[15] The agreement was effective July 29, 2019, and Grayscale had already transferred some assets to the custodian by the time of the announcement. Coinbase Custody is a New York State regulated trust company.[16] Grayscale was expected to transfer about $3 billion in assets to Coinbase Custody over an approximately 12 hour period, one of the largest transfers of cryptocurrency ever.[17]

Key People

  • Barry Silbert - Founder & CEO
  • Michael Sonnenshein - Managing Director

References