SEC Approves Grayscale’s Bitcoin Mini Trust ETF for Listing on NYSE Arca

Highlights:

• SEC approves Grayscale Bitcoin Mini Trust; trading awaits S-1 registration effectiveness.
• Grayscale’s Bitcoin Mini Trust features a low 0.15% fee.
• BTC Mini Trust plans to distribute shares 1:1 to GBTC holders next week.

Grayscale Investments has received approval from the US Securities and Exchange Commission (SEC) to launch its newest spot Bitcoin exchange-traded fund (ETF), Grayscale Bitcoin Mini Trust (BTC), on the New York Stock Exchange’s Arca platform.

The commission specifically approved the 19b-4 form for the Grayscale Bitcoin Mini Trust. The new fund will be a spin-off of GBTC, in which GBTC will move a certain percentage of its Bitcoin to the new trust, according to an S-1 filing posted in March. President of the ETF Store Nate Geraci confirmed the approval in a post on X, stating that the “Spinoff from GBTC set to happen next Wednesday (date of record is Tuesday).”

Grayscale Bitcoin Mini Trust 19b-4 has been APPROVED…

Spinoff from GBTC set to happen next Wednesday (date of record is Tuesday).

Will be lowest cost spot bitcoin ETF at 15bps. pic.twitter.com/opFrSAENFu

— Nate Geraci (@NateGeraci) July 26, 2024

According to an SEC document filed on Friday, the Commission believes the Proposals, like other ETPs it has approved, aim to ensure fair share pricing through transparent information disclosure, prevent trading without transparency, protect non-public portfolio information, and maintain fair markets for Trust shares. Grayscale is still waiting for the S-1 registration statement to become effective for the Grayscale BTC Mini Trust.

Grayscale to Spinoff 10% of GBTC’s BTC into a New Bitcoin Mini Trust

On July 31, Grayscale will contribute 10% of the spot Bitcoin held by GTBC to the Mini Trust. James Seyffart, a Senior Bloomberg ETF Analyst, explained that existing GBTC shareholders would get Mini Trust shares proportional to their GBTC holdings. As a result of the spinoff, GBTC holders will retain the same total amount of spot BTC, which will be distributed across two different funds.

Seyffart said:

“[F]rom a value point of view — say a theoretical person has $1,000 in ETHE or GBTC. After the spinoffs occur it should essentially be $900 in the original fund and $100 in the new mini ETF.” 

On July 8, Grayscale announced that its Grayscale Ethereum Trust (ETHE) ETF would distribute shares from its new Grayscale Ethereum Mini Trust (ETH) to existing ETHE shareholders. The spinoff benefits current ETHE holders by offering lower management fees with the Mini Trust. Since its launch on July 23, Grayscale’s ETH has experienced significant inflows, while ETHE has continued to see outflows.

Strategic Reduction in Fees and Market Impact

The July 26 filing states that the Grayscale Bitcoin Mini Trust will manage fees of 15 basis points, much lower than GBTC’s 1.5% annual fee. This fee structure aligns with Grayscale’s recent launch of the Ethereum Mini Trust, which also focuses on lowering costs for investors.

This adjustment enhances Grayscale’s competitiveness compared to low-cost ETFs like those from Franklin Templeton Digital Holdings Trust and the Bitwise Bitcoin ETF, which have fees of approximately 0.19% and 0.2%, respectively.

The latest development follows the SEC’s approval of 11 spot Bitcoin ETFs over seven months ago, attracting millions of dollars. Earlier this year, the agency also approved spot Ethereum ETFs in a surprising move. Grayscale received approval for both a spot Ethereum ETF and a spot Bitcoin ETF.