Grayscale Bitcoin Trust (GBTC) Converts to Spot Bitcoin ETF, Now Trading on NYSE Arca

TL;DR

**GBTC is officially a spot Bitcoin ETF and is now trading on NYSE Arca.**

AI Summary

On January 10, 2024, Grayscale Bitcoin Trust (BTC) filed an 8-K to announce the effectiveness of its Registration Statement on Form S-3, allowing its shares to be listed and traded on NYSE Arca, Inc. under the ticker symbol GBTC. This is a pivotal moment as it signifies the conversion of GBTC from a trust into an exchange-traded fund (ETF), making it more accessible to a broader range of investors and potentially increasing its liquidity and market valuation.

Why It Matters

This conversion to an ETF makes GBTC shares more accessible and liquid for investors, potentially driving increased demand and a higher valuation for the underlying Bitcoin holdings.

Risk Assessment

Risk Level: medium — While the ETF conversion is positive, the underlying asset, Bitcoin, remains highly volatile, introducing inherent market risk.

Analyst Insight

A smart investor would recognize this as a significant de-risking and accessibility event for GBTC, potentially leading to increased demand and a narrowing of any previous discount to NAV, and might consider it for long-term Bitcoin exposure within a regulated ETF wrapper.

Key Players & Entities

• Grayscale Bitcoin Trust (BTC) (company) — the registrant converting to an ETF
• NYSE Arca, Inc. (company) — the exchange where GBTC shares are now registered and trading
• January 10, 2024 (date) — date of the earliest event reported and effectiveness of the S-3
• GBTC (company) — the trading symbol for Grayscale Bitcoin Trust (BTC) Shares

Forward-Looking Statements

• GBTC will experience increased trading volume due to its new ETF status. (GBTC) — high confidence, target: Q1 2024
• The conversion to an ETF will attract a new segment of institutional investors to GBTC. (GBTC) — medium confidence, target: Q2 2024

FAQ

Filing Documents

• gbtc-20240110.htm (8-K) — 122KB
• gbtc-ex99_1.htm (EX-99.1) — 75KB
• 0000950170-24-004265.txt ( ) — 343KB
• gbtc-20240110.xsd (EX-101.SCH) — 26KB
• gbtc-20240110_htm.xml (XML) — 5KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Authorized Participant Agreements Grayscale Investments, LLC, as sponsor (the “Sponsor”) on behalf of the Grayscale Bitcoin Trust (BTC) (the “Trust”), and the Transfer Agent entered into Participant Agreements with Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital (USA) Inc. and ABN AMRO Clearing USA LLC, pursuant to which such entities have agreed to act as Authorized Participants, in each case effective as of January 10, 2024. Each Participant Agreement is substantially in the form filed herewith as Exhibit 10.1. The Trust issues common units of fractional undivided beneficial interest representing ownership in the Trust (“Shares”) to, and redeems Shares from, Authorized Participants on an ongoing basis, but only in one or more Baskets (with a “Basket” being a block of 10,000 Shares). The Participant Agreements set forth the procedures for the creation and redemption of Baskets by the Authorized Participants. Although the Trust creates Baskets only upon the receipt of Bitcoins, and redeems Baskets only by distributing Bitcoins, at this time an Authorized Participant can only submit “Cash Orders,” pursuant to which the Authorized Participant will deposit cash into, or accept cash from, the Cash Account in connection with the creation and redemption of Baskets. Cash Orders will be facilitated by the Transfer Agent and Grayscale Investments, LLC, acting other than in its capacity as Sponsor (in such capacity, the “Liquidity Engager”), which will engage one or more eligible companies (each, a “Liquidity Provider”) that is not an agent of, or otherwise acting on behalf of, any Authorized Participant to obtain or receive Bitcoin in connection with such orders. The Sponsor may in its sole discretion limit the number of Shares created pursuant to Cash Orders on any specified day without notice to the Au

02 Termination of a Material Definitive Agreement

Item 1.02 Termination of a Material Definitive Agreement. Authorized Participant Agreement In connection with the entry into the Participant Agreements referred to in Item 1.01 hereto, as of January 10, 2024, the Sponsor amended, solely, with respect to the Trust, the Participant Agreement, dated as of October 3, 2022, between the Sponsor and Grayscale Securities, LLC, a wholly owned subsidiary of the Sponsor and an affiliate and related party of the Trust, to remove the Trust as an entity covered by the Agreement. Distribution and Marketing Agreement Also as of January 10, 2024, the Sponsor amended, solely with respect to the Trust, the Distribution and Marketing Agreement, dated as of October 3, 2022, among the Sponsor, the Trust and Grayscale Securities, LLC, a wholly owned subsidiary of the Sponsor and an affiliate and related party of the Trust, to remove the Trust as an entity covered by the Agreement. In its capacity as distributor and marketer, Grayscale Securities assisted the Sponsor in developing an ongoing marketing plan for the Trust, preparing marketing materials regarding the Shares, including the content on the Trust’s website, and executing the marketing plan for the Trust.

01 Other Events

Item 8.01 Other Events. Listing on NYSE Arca On January 10, 2024, the SEC approved an application under Rule 19b-4 (the “19b-4 Application”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by NYSE Arca to list the Shares of the Trust. Shares of the Trust began trading on NYSE Arca on January 11, 2024. Commencement of Redemption Program Also on January 10, 2024, in connection with the approval of the 19b-4 Application, the Sponsor approved the commencement of a redemption program. The redemption procedures through which the Trust will redeem shares in exchange for distributions of Bitcoins are set forth in Item 1.01 hereto. Updates to the description of the Trust’s Shares: Creation and Redemption of Shares The Trust creates and redeems Shares at such times and for such periods as determined by the Sponsor, but only in one or more whole Baskets. A Basket equals 10,000 Shares. As of September 30, 2023, each Share represented approximately 0.0009 of one Bitcoin. The creation of a Basket requires the delivery to the Trust of the number of Bitcoins represented by one Share immediately prior to such creation multiplied by 10,000. The redemption of a Basket requires distribution by the Trust of the number of Bitcoins represented by one Share immediately prior to such redemption multiplied by 10,000. The Trust may from time to time halt creations and redemptions for a variety of reasons, including in connection with forks, airdrops and other similar occurrences. The Sponsor does not expect price differentials for Bitcoin across Digital Asset Trading Platforms or the closure of any single Digital Asset Trading Platform to adversely impact the ability of Authorized Participants to implement arbitrage mechanisms, as Bitcoin could be sourced through multiple Digital Asset Trading Platforms. The Sponsor acknowledges, however, that arbitrage mechanisms could be adversely impacted if trading of Bitcoin was

View Full Filing

View this 8-K filing on SEC EDGAR