Grayscale plans ‘mini’ low-fee version of GBTC Bitcoin ETF

Grayscale is seeking approval from the U.S. Securities and Exchange Commission (SEC) to introduce a low-fee version of the ETF called the Grayscale Bitcoin Mini Trust.

Grayscale Bitcoin Trust (GBTC)

The move aims to address concerns about the high fees associated with the existing GBTC product relative to rival offerings in the market, said the manager of the $28 billion GBTC spot bitcoin exchange-traded fund (ETF).

If approved, the Grayscale Bitcoin Mini Trust would offer existing GBTC investors the benefit of lower total blended fees without requiring them to pay capital gains tax to transfer into the new fund. Grayscale is seeking permission to spin out a percentage of GBTC shares to seed the new product. While the exact fees for the new product are not disclosed at this time, they are expected to be competitive with low-cost bitcoin ETFs already available in the market.

The high fees of the existing GBTC product, which stands at 1.5%, have been a concern for investors, especially with the emergence of lower-cost alternatives following the approval of spot bitcoin ETFs in January. Grayscale’s move to introduce a low-fee version of its flagship fund is aimed at addressing these concerns and attracting investors who prioritize cost efficiency.

Creating a flagship fund and a mini version is a common practice in the ETF industry, but Grayscale’s approach of forming the new fund through a corporate spinoff from GBTC is unique.

Despite experiencing significant outflows from GBTC since January, the fund has retained its original asset value due to support from the bull market in crypto assets. However, the availability of lower-fee options is likely to be appealing to registered investment advisors (RIAs) and broker networks looking to recommend bitcoin ETF products to their clients.