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An Introduction Of Grayscale Investments

BitForex Editor
Nov 13, 2020

It is almost a consensus between tech enthusiasts that digital currencies are the best things to happen to the internet since it came alive. Grayscale is keen on abating this notion. It believes that investors deserve a reliable partner to help navigate the world of digital investment. The company has provided foolproof investment opportunities and avenues that inspire people to test the "internet of money".

What is Grayscale?

Grayscale was founded by Barry Silbert who runs the parent company, Digital Currency Group, as well. The latter is a cryptocurrency venture capital firm with investments in Coindesk, Coinbase, and Ripple. Established in 2013, Grayscale focuses on delivering secure assets in digital currencies to investors through single-asset and diversified investment products.

In the past seven years, Grayscale Investments has risen to become the world's largest digital currency asset manager. The company is based in the lively state of New York and it offers 10 cryptocurrency investment products to both institutions and credible individuals. They are;

*Horizon Trust

*Bitcoin Cash Trust

*XRP Trust

*Ethereum Classic Trust

*Ethereum Trust

*Litecoin Trust

*Stellar Lumens Trust

*Bitcoin Trust

*ZCash Trust

*Digital Large Cap Fund.

There is regulatory clarity with Grayscale as the Bitcoin futures are CFTC registered and the public traded products are SEC-registered.

Of all the products Grayscale offers, its Bitcoin Trust is the largest followed by the Ethereum Trust. Subsequently, these two products will be outlined in their entirety.

Grayscale Bitcoin Trust

The Grayscale Bitcoin Trust (GBTC) is a pioneer among digital currency vehicles. It is the first company to successfully attain a position on the US Securities and Exchange Commission listings. Grayscale Bitcoin Trust is the largest investment vehicle in the firm, worth $2.4 billion as of the first quarter of this year.

GBTC was launched in September 2013 as the company's premier product and was traded as a private entity for about a year and a half before public quotation on the OTC market (OTCQX).

The presence of trust in two markets affects the nature of investors who can purchase the shares. The private placements are available to accredited investors only. They can subscribe to the fund in dollars and get shares as per the Net Value (NAV) daily. A rule, however, allows the resale of the shares to the public on OTCQX after a mandatory one-year lockup. Now, the liquid shares are available to all—even non-accredited investors— to purchase daily.

Grayscale Bitcoin Trust has a perk; those who buy it on the private placement do so at a daily NAV. Regardless of the lows and the peaks, investors can obtain shares at an average price. This makes a purchase at this point rather cheap and viable investors reap possible high returns. In comparison, publicly quoted GBTC trades are tagged with a premium, fixed by the market forces and demand impulse of clients.

Aim Of The Fund

The shares are on the heels of the market price of BTC and do not attract further expenses and fees.

Features Of The Grayscale Bitcoin Trust

● It Mirrors The Typical Investment Vehicle

GBTC idealizes the nature of traditional shares. It's shares bear the holder's name to facilitate a familiar structure for financial and tax advisors. Transfer to beneficiaries is also seamless following state laws.

● Eligible For Tax-Advantaged Accounts

Shares of this trust can be held in  IRAs, like Certain, Roth, and other brokerage and investor accounts. The tax burden is heavily decimated.

● Public Quotation

 Shares of this fund, deemed fit, are quoted on OTCQX with the ticker "GBTC". In this way, the shares can be bought or sold throughout trading days at prices close to that of the market.

● Backed By Reputable Service Providers

David Polk and Wardwell LLP acted as legal counsel to the backbone of the Grayscale Bitcoin Trust. Also, yearly audits on financial statements are carried out by Friedman LLP.

● Infallible Security

Assets are stored offline or online in the custody of Coinbase. It is a constant fear in the mind of investors that if they blink, their coins may disappear. Grayscale keeps its shareholders rest assured. A trusted custodian, Coinbase Custody is in complete accordance with the law.

Current Status

In recent reports, the Grayscale Bitcoin Trust is said to hold 456,537 BTC, translating into 58% of the total haul in possession of publicly traded companies. This is a testimony to the accelerated growth in a short period. Within the last five months, it has garnered 70 BTC.

How Does Grayscale Bitcoin Trust Work?

First, Grayscale invites a discreet set of rich investors to donate money to the fund. The pledges are used to procure bulk amounts of Bitcoin. Subsequently, Grayscale lists the fund on the public stock exchanges where anyone can trade its shares. The price of shares closely marks the market price of Bitcoin. They could also be traded at a premium too. Sales at a premium are readily available in comparison, availing Grayscale and its donors with decent profits.

However, the premium could exceed the parallel Bitcoin price and may not always favor investors. Nevertheless, they still take the risk. What makes a Bitcoin fund like Grayscale's attractive?

Benefits Of Grayscale Bitcoin Fund

Investment in a Bitcoin Trust allows people to have a seamless experience. They do not have to worry about doing the dirty work. An individual effort to invest will invite worries about cryptocurrency storage, compliance with the law, and even filing taxation. There are also security concerns especially with the daily news about hacking sprees. With Grayscale Bitcoin Trust, these obstacles are non-existent. It is held accountable by the US Securities and Exchange Commission and so is worth trusting.

Also, a public Bitcoin Trust has a couple of tax advantages. Many brokerage and investor accounts do not give individuals tax breaks, but they are lenient with investments in publicly traded trusts. So, a berth at Grayscale's Trust attracts friendly taxation.

It is impossible to trade Bitcoin against fiat currency backed stocks. The only remedy is employing crypto stock-derivatives platforms. This situation brings a gap between the crypto economy and the common, traditional economy. With Grayscale Bitcoin Trust on the stock exchange, traditional investors can try out cryptos.

It is necessary to mention that GRAYSCALE Bitcoin Trust is not an ETF(Exchange-Traded Fund). In an ETF, investors have shares that directly reflect the price of Bitcoin. Presently, Bitcoin ETFs are prohibited in the USA. Multiple applications to the SEC have been denied on the basis that Bitcoin's price can be manipulated.

Grayscale Ethereum Trust

This decentralized, smart contract platform is the first Ethereum vehicle to gain public quotation in the US and the second digital currency company on SEC's list, behind Grayscale Bitcoin Trust

As expected, Grayscale Ethereum Trust is financed solely with Ethereum and exposes investors to ETH in form of securities void of the common challenges linked with digital currency investing.  

This avenue was launched on 14 December 2017 and is equipped with features that its Bitcoin counterpart brings to the table.  The operations are similar as well. Grayscale Ethereum Trust is quoted as ETHE on the market. Recent estimations have placed the fund's total worth at $928 million.


Grayscale Investment is a resilient authority in digital currency trading. It has provided opportunities to invest in Ethereum, Bitcoin, Bitcoin Cash, ZCash, Litecoin, XRP, and some other cryptocurrencies. This company is certainly bringing ease and simplicity to how cryptos are handled and the future holds so much more in store with this assiduous progress.

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