Osprey Competes with GBTC on Fees as New Bitcoin Trust Launches on OTC Markets
As bitcoin surged above $50,000 Tuesday, even the most crypto-weary investors vyed for digital asset exposure. Osprey Funds became the latest in a slew of firms to offer investors passive exposure to digital assets through a bitcoin-only exchange-traded product. The Osprey […]
- The Osprey Bitcoin Trust is the latest publicly-traded fund that tracks the price of bitcoin
- Without a digital asset exchange-traded fund, investors are turning toward ETPs to gain exposure
As bitcoin surged above $50,000 Tuesday, even the most crypto-weary investors vyed for digital asset exposure. Osprey Funds became the latest in a slew of firms to offer investors passive exposure to digital assets through a bitcoin-only exchange-traded product.
The Osprey Bitcoin Trust (ticker OBTC) began publicly trading Tuesday with $79 million in assets under management. OBTC is the newest fund to operate under what has proven to be a very successful investment vehicle structure.
The trust is similar to other cryptocurrency exchange-traded products, such as the Grayscale Bitcoin Trust (ticker GBTC) and the Bitwise 10 Crypto Index (ticker BITW), but offers a lower annual management fee of 0.49 percent. GBTC charges two percent annually.
“As a fiduciary-minded organization, we believe bitcoin deserves a place in every investment portfolio, but at a reasonable price,” said Greg King, CEO of Osprey. “By bringing OBTC to the market, we are delivering value to advisors and investors by broadening their access to bitcoin but priced more like an exchange-traded fund, rather than a hedge fund.”
The Securities and Exchange Commission has yet to approve a digital asset ETF, but the publicly-traded trust structure has proven to be a successful investment vehicle. The Grayscale Bitcoin Trust, which also holds only bitcoin, launched in 2013 and is up more than 50 percent year-to-date with more than $31 billion in assets under management.
“In about 2016, we started researching ways to bring an exchange-traded product to market,” said King. “We spent a couple of years looking at an ETF and then when it became clear that that was it was too early for an ETF we moved to create the Osprey Bitcoin trust.”
ETF-adjacent digital asset products attract investors with the opportunity to gain exposure to the asset class without security or custody concerns, although the premium to net asset value is often high.
GBTC allows accredited investors to receive shares of the trust through private placement. Wealthy investors that put capital, either U.S. dollars or bitcoin, into the trust receive an equal value of shares, which can be sold after a holding period of six months. Regulations previously required a one year lock on shares, which is what OBTC requires.
“If you file for voluntary SEC reporting status, then you can potentially get approval and reduce that period to six months,” said King. “We’re intending to pursue that, I can’t make any promises about it, but we will be pursuing that route.”