Weighing Grayscale exposure after firm signals possible IPO path
Asset allocator says fee compression could be a challenge as Grayscale converts more crypto funds to ETFs
autsawin uttisin/Shutterstock and Adobe modified by Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
A month after Circle’s IPO, Grayscale Investments appears to be plotting a similar path.
Chances are you’ve seen the company’s airport ads or recalled it notched a big legal win against the SEC — even if you don’t know exactly what it’s up to these days.
Like Gemini did last month, Grayscale “confidentially” submitted a draft registration statement with the SEC. It’s a step toward going public. A spokesperson declined to comment further.
The Grayscale Bitcoin Trust (GBTC) launched as a private offering in 2013 and debuted on the OTC market in 2015. It morphed to an ETF in January 2024 — several months after a court ruled that the SEC blocking the conversion (while allowing bitcoin futures ETFs to start trading) was “arbitrary and capricious.”
While GBTC has seen roughly $23 billion of net outflows since becoming an ETF, its AUM still sits near $22 billion. Grayscale’s cheaper bitcoin ETF that launched a year ago manages $5.3 billion in assets.
Dan Weiskopf, a co-portfolio manager for the blockchain-focused Amplify Transformational Data Sharing ETF (BLOK), said an “innovative” company like Grayscale would have the scale, brand and focus required to be accepted on platforms, he added.
“When we have an opportunity to review the prospectus, we will be looking closely at expense control relative to its growth and how [it] expects to fight for market share,” Weiskopf told me.
Grayscale going public in the US would offer rather unique exposure for crypto equity investors. It’s obviously a different type of business than Coinbase, and while Galaxy Digital offers several crypto funds with Invesco and State Street Global Advisors, it’s not exactly a pure-play ETF issuer. You could maybe link it to DeFi Technologies.
While WisdomTree might be a good comparison from a valuation standpoint, Weiskopf argued, “it has the diversity that Grayscale lacks.”
WisdomTree had its IPO in 1991 and has grown its AUM to $126 billion. Though it offers a bitcoin ETF and tokenized funds, its equities, fixed income and alternatives business lines are bigger. BLOK’s allocation to WisdomTree is roughly 1.5%.
Grayscale has a few dozen private and publicly traded funds focused on other crypto assets. The SEC approved NYSE Arca’s 19b-4 to list shares of the Grayscale Digital Large Cap Fund (GDLC) as an ETF. But the order was “stayed,” and Grayscale shot back in a letter last week: “The commission has no power to do this after the 240th day” of the 19b-4 being published in the federal register.
Beyond GDLC, the SEC has until October to rule on proposals from Grayscale and others to bring to market single-asset products that would hold litecoin (LTC), solana (SOL), XRP, dogecoin (DOGE) and more.
“How they manage the fee compression will be a challenge,” Weiskopf said about Grayscale, should these conversions gain approval.
As bitcoin has soared in recent days (hovering around $120,000 this afternoon), we’ll see whether other crypto companies might take steps toward going public.
Weiskopf estimates there are between 10 and 25 such firms at various stages of the confidential IPO filing process.
Among Grayscale’s main competitors is Bitwise. A spokesperson told me that while Bitwise has considered an IPO, its 2025 focus is “entirely on serving clients engaging with this space like never before.”
All’s to say: There’s more where this came from.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
