In brief

  • Grayscale Investments has selected BNY Mellon for asset services on its flagship products.
  • BNY Mellon will also provide ETF services if the Grayscale Bitcoin Trust becomes an ETF.

Grayscale Investments has forged a deal with BNY Mellon which will see the global investments company act as the service provider for the crypto firm’s flagship product, the Grayscale Bitcoin Trust (GBTC.)

Starting from October 1, BNY Mellon, the world’s largest asset services company, will provide Grayscale Bitcoin Trust with fund accounting and administration services. Once plans to convert GBTC into an exchange-traded fund (ETF) come to fruition, BNY Mellon will then provide transfer agency and ETF services for the new product.

Today’s announcement demonstrates that Grayscale is forging ahead with its ETF plans, announced in April.

“Engaging BNY Mellon is an important milestone as part of our commitment to converting Grayscale Bitcoin Trust into an ETF,” said Michael Sonnenshein, CEO of Grayscale Investments, LLC, in a statement. 

By operating its GBTC as a Bitcoin ETF, Grayscale would be able to charge lower management fees and it would be easier to move money in and out of the fund. Currently, the asset manager charges a hefty annual management fee of 2%, and institutions need to lock up their Bitcoin for a minimum of six months, meaning that their investments are highly illiquid.

This is of concern because usually, the shares in a trust trade at a premium to the price of Bitcoin, although recently they've traded at a discount

Bitcoin ETF on the horizon

The U.S Securities and Exchange Commission (SEC) is yet to approve a Bitcoin ETF, while numerous applications have been made. 

Grayscale submitted its first application in 2016 but withdrew it the following year in anticipation of rejection. 

On Monday, the company’s VP of legal Craig Salm told Decrypt that while the ETF approval process could take until 2022, it may come sooner. Grayscale, he added, is ready to convert its existing trust shares into ETF shares as soon as the SEC gives the green light. 

The company has also obtained SEC reporting status for its Digital Large Cap Fund—which includes six major cryptocurrencies. The new designation changes the lock-up period for shares and makes them more attractive to conservative investors.

Inking a partnership with BNY Mellon also places Grayscale in prime position should the SEC go ahead with a Bitcoin ETF. Once passed, many enthusiasts are predicting yet another digital gold rush.