Grayscale CEO highlights 20% GBTC share buyback option if ETF conversion fails

According to an end-of-year letter to investors published on Dec. 10, Grayscale Investments CEO Michael Sonnenshein said that the firm might consider “a tender offer for a portion of the outstanding shares of GBTC [Grayscale Bitcoin Trust]” if the latter’s exchange-traded fund (ETF) conversion process is ultimately unsuccessful. Sonnenshein stated that “such tender offer would be for no more than 20% of the outstanding shares of GBTC” and would require both regulatory “relief” from the United States Securities and Exchange Commission as well as shareholder approval.

Grayscale and its subsidiary over-the-counter traded fund, GBTC, are currently embroiled in a lawsuit with the SEC after the latter denied Grayscale’s application to convert the GBTC to a spot Bitcoin ETF on June 29, 2022. As told by Sonnenshein, Grayscale filed its opening brief against the SEC on Oct. 11, 2022, and is due to submit its response to an SEC reply brief by Jan. 13, 2022, with the final written brief due on Feb. 3, 2022. “Shortly thereafter, a three-judge panel will be selected to hear oral arguments and rule on the case,” Sonnenshein wrote to investors. 

“In the event we are unsuccessful in pursuing options for returning a portion of the capital to shareholders, we do not currently intend to dissolve GBTC, but would instead continue to operate GBTC without an ongoing redemption program until we are successful in converting it to a spot bitcoin ETF.”

Cointelegraph previously reported that GBTC, along with other major Grayscale digital currency funds, is trading at discounts to net asset values, or NAVs, of 34%–69% due to solvency concerns arising from its parent company, Digital Currency Group, and its exposure to troubled cryptocurrency broker Genesis Global. At the time of publication, GBTC has $10.68 billion in Bitcoin (BTC) under management but is only worth $5.48 billion per market capitalization.