Grayscale has selected BNY Mellon – the oldest bank in the United States – to be the asset service provider for its bitcoin trust, which it will convert into an Exchange Traded Fund (ETF) soon.
The asset manager announced that it selected BNY Mellon as the asset servicing provider for its flagship product, the Grayscale Bitcoin Trust (GBTC). BNY Mellon is set to provide GBTC with a fund accounting and administration starting October 1st, 2021. More notably, the bank will also facilitate the trust’s intentions to become a more accessble exchange-traded fund (ETF).
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“Engaging BNY Mellon is an important milestone as part of our commitment to converting Grayscale Bitcoin Trust into an ETF,” said Grayscale CEO, Michael Sonnenshein. “BNY Mellon has a long-standing reputation as a trusted provider and has established one of the first teams dedicated to servicing the growing digital currency asset class. We are pleased that BNY Mellon will join a group of Grayscale’s best-in-class service providers, helping us deliver a seamless, industry-leading investment experience.”
By bringing BNY Mellon in-house, Grayscale is planning for the future as it expects regulatory approval to turn GBTC into an ETF soon. The intention, which the company announced in April, marks the fourth and last step of the trust’s life cycle.
If Grayscale’s plans are realized, BNY Mellon is expected to leverage its proprietary “ETF Center” to provide transfer agency and ETF services for GBTC, including technology allegedly designed to support such an offering. However, a successful conversion depends on the approval of the U.S. Securities and Exchange Commission (SEC).
While the bitcoin-based ETF race has heated up, the SEC has yet to approve an ETF. As such, it is unclear when GBTC would be transformed into an ETF. At the same time, an ETF analyst recently argued that the regulatory agency could be on the verge of approving such a product in the US due to the unprecedented level of institutional adoption seen in 2021.Last week, former chair of the Commodities Futures Trading Commission (CFTC), Timothy Massad, explained how the SEC approving a bitcoin ETF could be beneficial.
Retail investors would benefit from the conversion as investing in GBTC currently incurs high fees and a premium (though this has been caught in the negative recently). In the announcement, Grayscale itself shared how a conversion to an ETF would bring fees down. Either way, it shouldn’t be neglected that investing in any asset through an ETF only brings convenient price exposure — but not the full individual sovereignty that direct bitcoin investment promises.
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