This week Grayscale Investments, the sponsor of the Bitcoin Trust (OTCQX:GBTC) has announced a plan for the Bitcoin Cash (BCH) reserves the fund held onto after the fork. Currently, the sponsor is evaluating the idea of forming a separate entity for the holdings of BCH with plans to distribute the percentages among GBTC shareholders.
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Grayscale Evaluates the Feasibility of Forming an Entity to Hold Bitcoin Cash
Grayscale's Trust Contemplates Creating Another Entity for Bitcoin CashThe Bitcoin Trust, otherwise known as GBTC, is a fund that provides investment shares procured from the net asset value (NAV) of bitcoin’s market price. GBTC has been a very popular investment fund, as shares this year are trading at 120 percent premium compared to BTC spot prices. Back in July the Trust revealed details concerning its post-fork contingency plan and how the sponsor would deal with the newly created assets. Grayscale says it is currently working with advisors and third party services to “understand the implications” for the Trust after the creation of bitcoin cash.
“To maximize shareholder value, the sponsor has begun a process with the Trust’s professional advisers to evaluate, among other options, the feasibility of forming an entity to hold the bitcoin cash and distributing interests in that entity to the Trust’s shareholders,” explains Grayscale’s recent announcement.
Grayscale's Trust Contemplates Creating Another Entity for Bitcoin Cash
Discussing the Bitcoin Cash Topic With Relevant US Regulators
The firm also details it is currently discussing the topic of BCH and the Trust with U.S. regulators. This includes regulatory agencies such as the IRS, and the U.S. Securities and Exchange Commission (SEC) so the fund continues to remain a grantor trust for tax purposes.
“Receiving regulatory guidance in respect of such a distribution, while prudent, may be a lengthy process of several months or more,” details the GBTC sponsor.
There can be no assurance regarding whether or when the Trust will obtain such guidance.
Regulatory Guidance Will Determine Shareholder Participation
Grayscale explains that if the firm gets guidance on BCH from “relevant regulators” it will then determine a distribution date for GBTC shareholders. When information is available Grayscale plans to update investors on how the sponsor will deal with the bitcoin cash situation.
“However, the sponsor can offer no assurance as to whether or when shareholders of the Trust might participate in any value attributable to bitcoin cash,” the fund manager concludes.
What do you think about the Bitcoin Trust possibly creating a separate entity for bitcoin cash distribution? Do you think this idea is better for investors rather than Grayscale selling the BCH and distributing percentages that way? Let us know what you think in the comments below.
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