BlockFi Launches Bitcoin Trust To Rival Grayscale (GBTC)
Similar to the Grayscale Bitcoin Trust (GBTC), the BlockFi Bitcoin Trust will issue shares through private placements, the value of which will reflect the value of BTC held, minus overheads.
The BlockFi Bitcoin Trust launched on 8 February 2020 and currently has $29 million AUM. BlockFi has partnered with custodial firm Fidelity Digital Assets, and the trust offers a competitive 1.75% annual fee, compared with Grayscale’s 2%.
The first round of subscribers to the trust includes BlockFi and a select group of institutions. Once the initial lockup period ends, however, shares may become available on a wide range of recognized OTC brokerage platforms.
The BlockFi Bitcoin Trust will use Coin Metrics’ index services and pricing data, while financial advisory firm Grant Thornton LLP will audit the trust.
As of the launch, the trust is made up of approximately 685,500 shares outstanding, with each share representing 43.64 BTC.
Speaking of the launch, BlockFi CEO Zac Prince said the company had chosen the perfect time to launch given the institutional demand for Bitcoin products.
‘Given the level of institutional activity in recent months and demand for new, professional-grade investment vehicles, the timing of BlockFi Bitcoin Trust is ideal,’ said Prince, who said the aim was to broaden its availability.
‘As we work to broaden the availability of this vehicle to retail brokerages, we expect this product will facilitate greater investments in digital assets – at the core of BlockFi’s mission in bridging crypto with traditional finance.’
BlockFi – The Leading Crypto Finance Company
BlockFi’s latest venture into the financial world follows its other products that have made BlockFi one of the most recognisable and respected names in the crypto space.
The Bitcoin Rewards Card is set to be rolled out this spring in the US, and cardholders will earn 1.5% cash back on all purchases that will automatically be converted to Bitcoin.
The Bitcoin earned will be held in the BlockFi interest-bearing account, earning a 6% APY compound interest, paid monthly also in Bitcoin.
The BlockFi Bitcoin Trust Will Do For Now
BlockFi joins Bitwise and Osprey Funds in competing with Grayscale’s dominance in the Bitcoin trust market.
With BlockFi being a recognised brand and already having a large customer base, however, the BlockFi Bitcoin Trust could become a genuine competitor for Grayscale. At least until we get a Bitcoin ETF.
No doubt BlockFi, along with Grayscale and others, has launched a trust because it’s the best the SEC will allow them to offer right now.
Bitcoin Trusts are rather expensive, however, and their limited availability means they’re cut off from many of the large investors.
Therefore, once a Bitcoin ETF launches, many fear Grayscale and now the BlockFi Bitcoin Trust will lose market share. And while that is certainly possible, converting their trusts into an ETF is also plausible.