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- Grayscale CEO Michael Sonnenshein says the company will consider a 20 percent GBTC shares buyback offer if it loses the SEC case.
- Sonnenshein however remains confident that the court will rule in its favor to convert GBTC to a spot Bitcoin ETF.
Michael Sonnenshein, the CEO of leading cryptocurrency assets management firm Grayscale Investments, has stated that the company is not ruling out introducing a tender offer for its Grayscale Bitcoin Trust (GBTC) fund.
Sonnenshein made the revelation in his end-of-year CEO letter to investors. The CEO noted that the offer will only come into play if all attempts to convert the flagship Bitcoin fund to an ETF fail.
If we are not successful in our legal challenge in all applicable courts…we would explore other options to return a portion of GBTC’s capital to shareholders. These options could include a tender offer for a portion of the outstanding shares of GBTC,
The shares tender offer will also not exceed 20 percent of the outstanding shares of GBTC. Grayscale will also need regulatory “relief” from the SEC, as well as shareholders’ approval to facilitate the tender offer, he went on to add.
Meanwhile, Grayscale does not intend to dissolve GBTC should the tender offer option also fail. According to Sonnenshein, Grayscale will continue to operate GBTC without an ongoing redemption program — as it currently is.
Furthermore, Grayscale is confident that its bid to convert GBTC to a Bitcoin spot ETF will succeed. The firm dragged the SEC to court back in July and filed its first legal brief in the case in October. The SEC also filed its brief to which Grayscale needs to respond by Jan. 2023. Final briefs are expected in February after which a three-judge panel will rule on the case.
Sonnenshein tells investors that Grayscale remains confident that the court will agree with its “strong, common sense, and compelling legal arguments.”
Is an end in sight to the GBTC massive discount?
Sonnenshein’s letter is coming at a time when the GBTC fund has been trading at a significant discount. GBTC holds BTC worth over $10.68 billion under management, making it the largest Bitcoin fund globally.
However, shares of the fund are trading at discounts to net asset value (NAV) of around -46.37 percent according to data from YCharts at the time of writing. This puts the value of the fund’s BTC holdings at around $5.48 billion.
Speaking on the standing of things, Sonnenshein noted that failure to convert to an ETF has contributed largely to the trend. He added that market volatility caused by fears about its parent company also contributed. However, he assured investors that Grayscale remains sheltered from Digital Currency Groups’ financial troubles with Genesis.
