Katherine Ross

Osprey Bitcoin Trust (OBTC) warned Tuesday that it needs to either sell the Trust or merge with an existing bitcoin ETF.&nbsp;



“As part of the strategic process, the Sponsor plans to consider a wide range of options, and is in various discussions about a potential sale of the Trust to, or merger with, an existing Bitcoin ETF,” the Trust said in a <a href="https://www.businesswire.com/news/home/20240305394342/en/Osprey-Bitcoin-Trust-Announces-Exploration-of-Strategic-Alternatives-and-Voluntary-Deregistration">statement</a>.&nbsp;



However, “in the event such talks do not conclude positively, the Sponsor intends to liquidate and dissolve the Trust within 180 days from today,” it continued.



The decision to seek “strategic alternatives” came after the Trust said it was “aware that the common units of fractional undivided beneficial interest of the Trust are trading at a discount to the value of Bitcoin.”



The Trust will file a Form 15 with the Securities and Exchange Commission to deregister.&nbsp;



Last January, <a href="https://blockworks.co/news/osprey-proposes-gbtc-takeover">Osprey looked into taking over management of Grayscale’s bitcoin trust</a>. The trust, which is still managed by Grayscale, was one of a handful of bitcoin ETFs to launch in January.&nbsp;



Prior to the conversion of Grayscale’s fund, Osprey’s Trust was a competitor to GBTC.&nbsp;



At the end of January last year, the<a href="https://blockworks.co/news/osprey-files-grayscale-lawsuit"> trust’s parent company even launched a lawsuit against Grayscale</a>. Osprey claimed that Grayscale misled investors by engaging in “deceptive acts and unfair competition.”&nbsp;



At the time, Grayscale had recently launched its suit against the SEC after the agency blocked GBTC’s first conversion.



In August of last year, a court sided with Grayscale and ordered the SEC to once again consider GBTC’s application to convert to an ETF. In January of this year, the SEC voted to greenlight the spot bitcoin ETFs.



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Osprey Bitcoin Trust seeks merger or sale with existing bitcoin ETF

Ben Strack

The leader of an online movement advocating to strip Grayscale Investments from management duties of its <a href="https://blockworks.co/tag/gbtc">Bitcoin Trust (GBTC)</a> said the proposals by asset managers to take over the trust are likely just beginning. 



Roughly 2,600 investors have so far reached out to the online campaign — investors that own about 153 million, or 22%, of GBTC’s 692 million shares, according to David Bailey, the CEO of BTC Inc. and founder of the <a href="https://www.redeemgbtc.com/" target="_blank" rel="noreferrer noopener">Redeem GBTC</a> group.&nbsp;&nbsp;&nbsp;



More than 100 of those are institutions, he noted, which account for about two-thirds of that total.



Among them are hedge fund Fir Tree Partners and crypto investment firm BlockTower, he said. Bailey declined to disclose other institutions for now.&nbsp;



The campaign’s website figures are self-reported. Bailey’s estimates also come from direct conversations he has had with institutions, he said.&nbsp;&nbsp;



Among the campaign’s goals are offering a path to redemptions for GBTC investors, reducing the trust’s management fees and ensuring a competitive bidding process for potential new GBTC sponsors.&nbsp;



The trust has been <a href="https://blockworks.co/news/gbtc-takeover-attempts-explained">under fire</a> in recent months as <a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noreferrer noopener">its discount</a> has hovered in the 40% range and reached as high as nearly 50%. Grayscale has said its efforts to <a href="https://blockworks.co/news/grayscale-sec-illogical-denial-of-gbtc-conversion">convert GBTC to an ETF</a>, if successful, would essentially eliminate the discount.&nbsp;



Grayscale’s parent company is Digital Currency Group (DCG) — a company that also owns Genesis, which <a href="https://blockworks.co/news/genesis-in-chapter-11-wont-insulate-silbert-winklevoss-says">filed for bankruptcy</a> last week.&nbsp;



In <a href="https://blockworks.co/news/lawsuit-against-grayscale-likely-to-drag-on">a suit filed</a> last month, Fir Tree was seeking information about the exact relationship between DCG and both subsidiaries, adding the potential interdependence between these companies is “troubling.” Grayscale <a href="https://blockworks.co/news/grayscale-to-fight-fir-tree-lawsuit">told Blockworks</a> the suit is “baseless and without merit.”



Valkyrie Investments made a proposal last month to take over GBTC as its new sponsor and manager, according to the <a href="https://valkyrieinvest.com/press/opportunities-around-gbtc/" target="_blank" rel="noreferrer noopener">public letter</a> attributed to the firm’s chief executive. It proposed an annual management fee of 0.75% for GBTC — down from the current 2% Grayscale charges.&nbsp;



Osprey Funds last week <a href="https://blockworks.co/news/osprey-proposes-gbtc-takeover">made its own proposal</a> to become GBTC’s manager, proposing an even smaller fee of 0.49%.&nbsp;



Cryptoasset manager 3iQ threw support behind Fir Tree’s proposal, noting Grayscale had so far been unresponsive to its outreach regarding ways to remedy GBTC’s discount, <a href="https://www.bloomberg.com/news/articles/2022-12-22/crypto-firm-3iq-adds-voice-of-support-to-fir-tree-grayscale-suit" target="_blank" rel="noreferrer noopener">Bloomberg reported</a>.&nbsp;



A 3iQ spokesperson confirmed the report but declined to comment about submitting a potential proposal to take over GBTC.&nbsp;



21Shares, the largest issuer of crypto ETPs, also declined to comment.&nbsp;



“We want to force an uncomfortable conversation around alternative visions for the trust and how other people would run it,” Bailey said. “How do we make the case that a certain fee structure is unreasonable? Well, we get a lot of different firms to put forward their proposal and let’s compare what the fees are.”



Bailey said he expects more firms to come forward with proposals in the coming weeks — crypto-focused companies as well as traditional finance firms. He declined to comment on specific firms.&nbsp;



“The vultures are circling,” he said. “This is the world’s largest pot of bitcoin. Every single firm that is in asset management is looking at this, licking their chops and wanting to take a bite.”



Keep reading for some excerpts from Blockworks’ interview with Bailey:



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: What sort of institutions has the Redeem GBTC campaign engaged with?



Bailey: So many people interact or do business either directly or on the periphery with [DCG CEO] Barry [Silbert] that people do not want their names out there yet.



But we’ve heard from institutions that manage $1 trillion-plus in assets. We’ve heard from institutions that are multi-hundred-billion-dollar firms, $10 billion firms and a bunch of $1 billion firms.



It’s pretty incredible how many people have been circling this trade and this asset for a while waiting for something to happen, and we were just kind of the catalyst that started the fire.



Blockworks: After they tell you they are a GBTC shareholder, what happens next?



Bailey: Typically the conversation pivots to them asking, how can we help? What can we do? We’ve gotten all sorts of offers of resources and support.



We have some of the best law firms out there consulting and giving advice. We’ve been offered financial resources. We haven’t taken any of those offers yet. We will at some point once the costs become unmanageable for us…to pay for financial auditors, on-chain analysis sleuths, public relations campaigns, investment bank advisors, bankruptcy counsel.



There’s a lot of different vendors that need to be engaged in this process so that we can adequately push forward all the different prongs of our plan and attack.



Blockworks: What is the campaign most focused on in the near term?



Bailey: Right now, the next steps are engaging all the right vendors, so we can have day-to-day execution that doesn’t require myself — I have a full-time job running a company.&nbsp;



We want to have an operation and front office built out, so this campaign can be driven forward by bulldogs that know what they’re doing and each have their respective lane that they own.



We are actively engaged on the regulatory and political side. That is probably the fastest path to have some sort of intervention here is getting the SEC or the Attorney General of Delaware to act.&nbsp;



They have kind of God powers over the trust and can change the fees, can change the redemption policy, could change the name. They can do whatever they want, so we’re pursuing that path aggressively.



Blockworks: In addition to the SEC and the attorney general of Delaware, I know you also mentioned in a tweet that two unnamed state regulators reached out to the Redeem GBTC campaign?



Bailey: I think by the time it’s all said and done, you’re going to have multiple different jurisdictions competing for relevancy in this case. I think this is the most high-profile catastrophe in crypto on the scale of the FTX disaster, and I think that there are a lot of regulators accused of being asleep at the wheel.&nbsp;



They’ll want to take a more proactive approach in this case to score a win with their constituencies and the investing public. It’s the right thing to do and we welcome their intervention.



This interview was edited for brevity and clarity.



Updated Jan. 23, 2023 at 3:23 pm ET: Added context to the Redeem GBTC campaign&#8217;s estimates.



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Asset Managers ‘Licking Their Chops’ Over Potential GBTC Takeover

<div id="highlights-block_613a5150dc4ec" class="highlights">
 <ul>
 <li>Product joins other Osprey funds offering exposure to bitcoin, Algorand and Polkadot as firm is focused on providing investor access to promising Layer 1 protocols </li>
 <li>SOL reached as high as $213.47 within the last day, according to CoinGecko, and its price of $196.75, as of 1:30 p.m. eastern, was up 77.6% from seven days ago</li>
 </ul>
 
</div>



Osprey Funds’ has launched the first investment vehicle to offer exposure to SOL, the native token used on the <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fsolana.com%2F&amp;esheet=52488403&amp;newsitemid=20210909005181&amp;lan=en-US&amp;anchor=Solana+blockchain&amp;index=3&amp;md5=e5a8b3484757c2518d01aae8947de601">Solana blockchain</a> as the token’s price has recently rallied.



The New York-based digital asset manager announced on Thursday morning the launch of the <a href="https://ospreyfunds.io/products/osol/" target="_blank" rel="noreferrer noopener">Osprey Solana Trust</a> for private placement. 



Currently available to accredited investors with a $10,000 minimum investment, the firm plans to pursue listing the fund on the OTCQX market, according to a news release. It has also agreed to waive the management fee for all investors until January 2023.



<blockquote class="wp-block-quote">“We’ve been focused on launching first-to-market funds that track what we think are promising Layer 1 protocols,” Osprey Funds CEO Greg King told Blockworks. “Solana is a great example of that [with its] extremely fast transaction speed and low costs.”</blockquote>



Anatoly Yakovenko, Solana’s founder and CEO, introduced proof-of-history to the blockchain, an algorithmic solution for time-stamping transactions. The innovation enables the Solana network to process 65,000 transactions per second, with sub-second block finality. The firm expects the network to get faster as its bandwidth increases.



Matthew Sigel, head of digital assets research at fund manager VanEck, previously said that the proliferation of <a href="https://cms.blockworks.co/competition-in-layer-1-space-continues-to-heat-up/" target="_blank" rel="noreferrer noopener">competing Layer 1 smart contract platforms</a> has come about amid a higher demand for lower transaction prices and faster throughput than what the Ethereum network provides. He noted that Solana’s transactions per second could rival Nasdaq, opening up the potential to securitize, tokenize and trade existing assets using the Solana network.



King said that Osprey became determined to launch a Solana product after meeting with the Solana team in June in Miami. The firm also offers the <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fospreyfunds.io%2Fproducts%2Fobtc%2F&amp;esheet=52488403&amp;newsitemid=20210909005181&amp;lan=en-US&amp;anchor=Osprey+Bitcoin+Trust+%28OBTC%29&amp;index=4&amp;md5=ac0f72e19cb2f603ae6792544ff9dfdf" target="_blank" rel="noreferrer noopener">Osprey Bitcoin Trust (OBTC)</a>, the <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fospreyfunds.io%2Fproducts%2Fopt%2F&amp;esheet=52488403&amp;newsitemid=20210909005181&amp;lan=en-US&amp;anchor=Osprey+Polkadot+Trust&amp;index=5&amp;md5=9ddb9d920745a43c261ada8b0209be68" target="_blank" rel="noreferrer noopener">Osprey Polkadot Trust</a> and the <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fospreyfunds.io%2Fproducts%2Foalg%2F&amp;esheet=52488403&amp;newsitemid=20210909005181&amp;lan=en-US&amp;anchor=Osprey+Algorand+Trust&amp;index=6&amp;md5=d307e675397f4676eeb8390e3a2b0eda" target="_blank" rel="noreferrer noopener">Osprey Algorand Trust</a>.



“We’ve seen it integrating itself into the NFT boom and there are so many other potential applications for Solana,” King added. “So for us it was a logical next step in terms of our product development.”



The launch comes as SOL’s price has <a href="https://cms.blockworks.co/solana-soars-while-btc-eth-and-cardano-dip/" target="_blank" rel="noreferrer noopener">increased in recent days</a> while competing tokens have dipped. 



SOL reached as high as $213.47 within the last day, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">CoinGecko</a>. Its price of $196.75, as of 1:30 pm eastern, was up 77.6% from seven days ago, the data shows. Its market capitalization of about $58 billion is now the sixth-highest among tokens, behind Binance Coin and ahead of XRP.



The price of seven of the other nine top 10 tokens by market cap were down from seven days ago, CoinGecko indicated, aside from Tether and USD Coin, which were essentially flat — up 0.2% and 0.1%, respectively, over the span.



King attributed some of the recent buzz around Solana to crypto exchange FTX’s announcement that its new NFT marketplace would allow creators and owners to trade their digital art using both Solana and Ethereum.



“I think it’s just caught wind out there in the face of what was otherwise a <a href="https://cms.blockworks.co/bitcoin-drops-nearly-11-tuesday-on-whale-leverage-liquidations/" target="_blank" rel="noreferrer noopener">fairly sharp pull-back</a>,” the Osprey Funds CEO said. “We felt it was pretty impressive to see Solana hold up and make gains the last few days.”



Though Ethereum has the early lead in the decentralized finance, or DeFi space, King said, he labeled Solana and Algorand as potential challengers. Osprey remains supportive of Ethereum, he added, and continues to monitor the space from a product standpoint.



“No one knows how this is going to end,” King said. “But our focus is on bringing these types of layer-one protocols that we do think can carve out a niche or even be very broadly and widely used … to market in a way so that investors who need more traditional access vehicles, like funds, can participate.”



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

Osprey Funds Launches Solana Trust Amid Token’s Rally

<div id="highlights-block_61266f61f1d0a" class="highlights">
 <ul>
 <li>Solana had the largest inflows of any digital asset last week, bringing in $7.1 million, according to a CoinShares report </li>
 <li>New York-based firm currently offers three trusts focused on giving investors access bitcoin, as well as the native tokens of Algorand and Polkadot networks</li>
 </ul>
 
</div>



<a href="https://ospreyfunds.io/media/" target="_blank" rel="noreferrer noopener">Osprey Funds</a> is seeking to bring an investment offering focused on Solana (SOL) as the token has become a top 10 digital asset by market capitalization.



The Tarrytown, New York-based firm filed <a href="https://www.sec.gov/Archives/edgar/data/1868282/000186828221000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">a document</a> with the SEC on Tuesday for an Osprey Solana Trust. The proposed product looks to be seeking permission to launch only to accredited investors, and the minimum investment for an outside investor would be $10,000.



It appears that the trust would be the first private Solana investment offering in the US. Competing firm Grayscale Investments <a href="https://grayscaleinvest.medium.com/update-grayscale-investments-exploring-additional-assets-e4e80da683bb" target="_blank" rel="noreferrer noopener">announced in June</a> that it was considering adding Solana to its product family.&nbsp;



An Osprey spokesperson for the company declined to comment on the filing.&nbsp;



The investment manager currently offers the <a href="https://ospreyfunds.io/products/obtc/">Osprey Bitcoin Trust</a> (OBTC), as well as trusts that provide a way for accredited investors to access the native tokens of the <a href="https://www.algorand.com" target="_blank" rel="noreferrer noopener">Algorand</a> and <a href="https://polkadot.network" target="_blank" rel="noreferrer noopener">Polkadot</a> networks. OBTC has about $137 million in assets, while the Polkadot and Algorand products have roughly $19 million and $12 million, respectively.&nbsp;&nbsp;&nbsp;&nbsp;



<h3 class="wp-block-heading">A competitor to Etherum</h3>



<a href="https://solana.com" target="_blank" rel="noreferrer noopener">Solana</a> is a blockchain driven by intra-shard parallelism, which is capable of processing thousands of smart contracts at once, according to the firm, as well as proof-of-history, an innovation in distributed timekeeping that unlocks low-latency, sub-second finality.



Known as a competitor to Ethereum that offers a flexible infrastructure and faster transaction settlement, Solana had the largest inflows of any digital asset last week, bringing in $7.1 million, according to a CoinShares report released on Monday.&nbsp;



Ethereum had $3.2 million of inflows, while other altcoins Cardano, Litecoin and Polkadot brought in $6.4 million, $1.8 million and $1.1 million, respectively. Meanwhile bitcoin endured its seventh straight week of outflows, amounting to $2.8 million. This streak matches one seen in 2018.



<blockquote class="wp-block-quote">“For a while now the focus has been on Ethereum, but we are seeing spillover into alternative Layer 1 solutions like Solana,” CoinShares Investment Strategist James Butterfill told Blockworks in an email. “As Solana addresses many of the issues Ethereum currently faces, such as scalability, it has recently gained investor interest.”</blockquote>



Solana Labs, the blockchain studio that incubates and launches decentralized finance projects built on Solana, <a href="https://solana.com/news/solana-labs-completes-a-314-15m-private-token-sale-led-by-andreessen-horowitz-and-polychain-capital" target="_blank" rel="noreferrer noopener">announced in June</a> that it had raised over $314 million of new funding in a private token sale led by Andreessen Horowitz and Polychain Capital.



Solana’s <a href="https://cms.blockworks.co/solana-and-terra-tokens-rise-amid-nft-craze-markets-wrap/" target="_blank" rel="noreferrer noopener">token price boomed</a> to above $80 a few days ago amid rising non-fungible token, or NFT, sales. Earlier this month, <a href="https://solanart.io/collections/degenape" target="_blank" rel="noreferrer noopener">The Degenerate Ape Academy</a> was listed on NFT platform <a href="https://solanart.io/" target="_blank" rel="noreferrer noopener">Solanart</a>, which uses the Solana blockchain to mint digital art. All 10,000 cartoon apes sold in eight minutes.



<h3 class="wp-block-heading">Layer 1 protocols are booming</h3>



As of Noon eastern time on Wednesday, (SOL) was priced at $71.41, which was up 11% from seven days ago, according to CoinGecko. Its total market capitalization stands at nearly $21 billion, which is 10th most among digital tokens, the data shows, ahead of Uniswap.&nbsp;



Michael Novogratz, CEO of Galaxy Digital, said during the firm’s <a href="https://cms.blockworks.co/galaxy-shares-2q-loss-but-novogratz-bullish-on-defi-and-nfts/" target="_blank" rel="noreferrer noopener">second quarter earnings call</a> that though Galaxy is very bullish on Ethereum, Layer 1 protocols like Solana are booming as people are questioning if Ethereum will be “the winner” within the DeFi space.&nbsp;



“The whole level one space right now is all very exciting, but it&#8217;s because people are seeing where this is going in three to four years,” Novogratz said. “They&#8217;re seeing that NFTs aren&#8217;t a fad and that it&#8217;s a way that we are going to monetize value and creativity.”



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

Osprey Funds Looking To Offer Solana Trust

Morgan Chittum

<div id="highlights-block_610b46b09083b" class="highlights">
 <ul>
 <li>To date, Osprey has launched three funds: Osprey Bitcoin Trust, Osprey Algorand Trust and Osprey Polkadot Trust</li>
 <li>King says the company has plans to offer clients even more investment options in the future</li>
 </ul>
 
</div>



As traditional financial and digital assets markets are slowly merging, Blockworks is taking a closer look at how fund managers are navigating the volatile market.



I spoke with <a href="https://ospreyfunds.io">Osprey Funds</a>’ co-founder and CEO Greg King, CFA, about what sets the digital asset investment firm apart from competitors and how they appeal to their investors. The fund operates with approximately 15 employees and $115 million AUM, as of interview time.&nbsp;



King has taken both his interest in crypto and traditional finance experience to help found Osprey in 2018. Previously, he worked as Head of Exchange Traded Products at Credit Suisse and held key positions at Barclays Capital. King received his MBA from University of California Davis.



Osprey has launched three funds (so far) for investors, including their Bitcoin Trust, Algorand Trust and Polkadot Trust.



King, CFA, says the company has plans to offer clients even more investment options in the future.



Chittum: What gives Osprey Funds an edge over competitors like Grayscale? How do you set yourselves apart?



King: As we develop a product lineup overtime, I think investors will be able to see how we differentiate…. We have the bitcoin fund which is done at a lower price point and with different service providers. The other funds that we have rolled out are both first-to-market products that don’t compete with anything that Grayscale has.



Right now, we have single asset-based trusts. We have three products: Bitcoin, Algorand and Polkadot. In the future, you’ll see us launch index based products… so they’ll give broader exposure for investors. You’ll also see actively managed strategies that are not just passive beta products. They will be alpha products.



One of the differentiators around Osprey is that we are fully focused on digital assets only. We are committed long term to the space. This is not just an experimental product launch. We are building a world class investment firm and are excited about the growth prospects it has.



Chittum: How would you describe Osprey’s investment strategy?



King: At Osprey, I think, at a fundamental level, we fully believe in the power of blockchain-based technologies. Period. We’ve set ourselves up to both invest and help others invest in those technologies for the benefit of their long-term investment portfolios.&nbsp;



We believe in diversification as a strategy. I believe that investors benefit from having their portfolio professionally managed, either by themselves or by more formal institutions…Our main purpose is to really help give investors access — from an investment perspective — to the potential returns in growth that we think is generational in terms of the magnitude of blockchain-based technologies.&nbsp;



Chittum: What’s something that attracts those investors to your fund? What type of investors are you targeting?&nbsp;



King: The products are built to an institutional caliber so we are focused on and [are] able to offer them to institutional clients. The majority of our assets have come from institutional clients. However, they’re also available to individual investors and we are committed to creating more pathways to access them. [This is] primarily by registering them under a ticker symbol to be traded whenever possible.



Chittum: What is something you wish more investors knew about Osprey?



King: I think they should understand the depths of the team’s backgrounds in both [exchange traded funds] and crypto. Not just myself but other members of our teams have decades of experience working with ETFs for large companies like Barclays, Deutsche Bank, JPMorgan and more.