BNY Mellon Partners With Grayscale Investments’ GBTC and Its Bitcoin ETF
Asset manager Grayscale announced that it has selected BNY Mellon as the asset servicing provider for its flagship product, the Grayscale Bitcoin Trust (GBTC). BNY Mellon will run the Bitcoin Trust, which was previously converted into an SEC-reporting firm, as part of the agreement, starting October 1, 2021, and facilitate the trust’s future intention to become an exchange-traded fund (ETF).
Grayscale has hired BoNY to do servicing for $GBTC. Another step towards trying to convert $GBTC and build out ETF operation (curr looking to hire like 10ppl). Altho not clear if/when they will be able to convert. Via @cfb_18 pic.twitter.com/CC7exdJ5NG
“Engaging BNY Mellon is an important milestone as part of our commitment to converting Grayscale Bitcoin Trust into an ETF. 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).
Although the bitcoin-based ETF race has heated up this year, the SEC has yet to approve one. So, it is unclear when and if GBTC would be transformed into an ETF. But an ETF analyst recently argued that the regulatory agency might be on the cusp of approving such a product in the U.S. due to the unprecedented institutional bitcoin adoption levels seen in 2021. And, 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 probable conversion as investing in the institutionally-geared GBTC currently incurs high fees and often a premium. Grayscale itself shared in the announcement how a conversion to an ETF would bring fees down. In either case, 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.
Roman Regelman, BNY Mellon’s CEO of Asset Servicing, said the agreement was a critical milestone in the company’s digital assets capabilities and a reflection of their commitment to always putting the client first. “Providing vital fund administration services to the world’s largest digital currency asset manager further reinforces BNY Mellon’s position at the crossroads of trust and innovation,” he continued.
While Grayscale Investments is considered to be the largest global assets management company with about $30B in assets in its investment portfolios, BNY Mellon is touted to be the world’s largest asset servicing firm with over$2.2T in assets under management. A collaboration between the two industry leaders will be mutually beneficial. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK) and renders its services in up to 35 nations globally.
