Messari Research’s Ryan Selkis: ETF Conversion Would Eviscerate Grayscale's Revenue by More Than 50%

Jun 30,2022
KingData News: While Grayscale has filed a lawsuit against the SEC to try to force their hand to change this, Messari Research’s Ryan Selkis has laid out a few scenarios in a note that he sees as possible outcomes for this quagmire. Should GBTC be converted to an ETF, it would be a massive loss in fee revenue for Grayscale as the firm takes a 2% fee on the underlying assets regardless of the discount. “A ‘winning’ case and ultimate ETF conversion would eviscerate Grayscale's revenue by more than 50%. An ETF would mean an open redemption window, and a likely reduction in fees in order to retain AUM (assets under management). We’re talking about $200 million+ per year in profit reduction for DCG,” Selkis wrote. “What's interesting is that there's a non-zero chance that the SEC blocks Grayscale purely out of spite, and because they don't want to reward what they view as historically bad behavior,” Selkis wrote. The bad Grayscale Trade was 3AC’s first step toward insolvency. 3AC owned a huge chunk of GBTC with leverage — up to 6% of the trust at one point.” (CoinDesk)
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