SEC Approves Grayscale Bitcoin Mini Trust to Trade on NYSE Arca

The U.S. Securities and Exchange Commission (SEC) has approved the New York Stock Exchange (NYSE) Arca’s request to list shares of Grayscale’s Bitcoin Mini Trust.

“This approval order is based on all of the Exchanges’ representations and descriptions in their respective amended filings, which the Commission has carefully evaluated,” wrote the SEC in a late Friday rule change filing.

The regulator approved NYSE Arca’s request for authorization to trade the new derivative on Friday. The SEC also granted accelerated approval of the Chicago Board Options Exchange (CBOE) BZX on the same day.

A strategic pivot

As Decrypt reported back in mid-March, Grayscale’s Ethereum Mini Trust is part of the asset manager’s plan to stop its Grayscale Ethereum Trust (ETHE) ongoing market cap bleed. Now the newly approved Bitcoin mini trust is trying to achieve the same for the Grayscale Bitcoin Trust (GBTC). This exchange-traded fund (ETF)—which will boast the familiar ticker “BTC”—was seeded as GBTC spin-off with a portion of its funds directed to the new fund.

Since its conversion from a close-ended fund to a spot ETF, GBTC has significantly lagged behind competitors when it comes to inflows. The reason is largely attributed to Grayscale keeping its fees significantly higher than its competitors.

It’s hard to say why Grayscale didn’t join in on the Bitcoin ETF fee war, but GBTC was the only ETF launching with a large client base from the get-go.

Grayscale charges GBTC holders 1.5%, whereas BlackRock and others only charge their holders 20 to 30 basis points per year. Other competitors opted for entirely waiving their fee for early buyers.

The Bitcoin Mini Trust’s fees would be exactly ten times lower—set at 0.15%—than GBTC’s, allowing the company to rack in new users while retaining the holders who have no choice but not to sell GBTC to avoid a taxable event.

GBTC holders will see a part of their holdings be converted to the new fund, but the company explained that this is not expected to constitute a taxable event. A company executive from an asset manager, who declined to be named while speaking about a competitor, told Decrypt in March that a steep tax bill could be a deterrent for investors thinking about exiting high-fee ETFs.

They added that, “unless you have a massive capital gain and want to avoid paying taxes, you’re going to rotate to a lower-fee product.”

Edited by Stacy Elliott.