BlockFi, the crypto lender, launched the Bitcoin trust with an annual fee that falls 25% below the amount that industry leader Grayscale Bitcoin Trust (GBTC) demands from investors.
With a management fee of 1.75%, the fund began taking subscriptions last Friday, and the fund’s assets of about $ 30 million are managed, according to the website. About six to 12 months from now, Prince said trust should be available in over-the-counter markets and made available to trade through brokerage accounts.
The company joined Bitwise and Osprey Funds, competing with Grayscale’s dominance in the bitcoin trust market. (Grayscale is owned by CoinDesk parent company Digital Currency Group).
BlockFi will also compete with Grayscale for partnerships with corporate trusted brands.
The fund’s assets are stored by Fidelity Digital Asset Services, Davis Polk & Wardwell will act as BlockFi’s legal counsel in connection with the trust, Coin Metrics will provide index and pricing data, and Grant Thornton will act as the fund’s auditor. BlockFi will declare a partnership with a broker-reseller before the shares are traded publicly.
Prince couldn’t say whether the shares would receive a premium based on the bitcoin spot price as Grayscale’s trust, but Bloomberg Intelligence ETF research analyst James Seyffart said there was little reason to think it wouldn’t be the case since then. there is not enough stock in the funds to meet the demand. Seyffart added that BlockFi could attract a significant number of retail users who already use the firm’s other bank-like products.
“If you are using BlockFi, they can attract some of their customers who use them for high-interest accounts, whether crypto or USDC,” said James Seyffart, Bloomberg Intelligence ETF research analyst.
Seyffart said that if the U.S. Securities and Exchange Commission (SEC) approves a bitcoin ETF, the value proposition for the BlockFi fund and such funds could be reduced.
The analyst added: “I don’t think we can get an approval, or at least talk of looking for approval for a bitcoin ETF in 2021 and maybe 2022.”
Prince said he would welcome a Bitcoin ETF.
“Firms that set up relationships, distribution and asset management structures to manage key assets before an ETF is approved, regulators will be on the shortlist of companies that are really well-positioned to create an ETF or switch to an ETF, we are ready for that,” Prince said.