The dirty little secret Grayscale doesn’t like to tell regarding their roach motel

So you probably heard that their ETF application got denied for the thousandth time. Pikachu faces, I know. And every time it happens they huff and puff and swear they’ll defeat the SEC next time! I think they sued them now, cool.

However there’s a dirty little detail that gets missed every time there’s this little dance between the institutional roach motel owners (Grayscale) and the SEC. And that detail is simple, Grayscale is effectively a closed end fund not only because the SEC denies their ETF but also because Grayscale DOESN’T WANT TO create a redemption programme for their GBTC shares even though they could.

Yep, you read that right, Grayscale could totally close that discount but they will never do that for a funny reason. And that reason is a redemption programme would involve Grayscale offering to cancel some shares, with exiting investors being paid at NAV. Don’t take my word for it!

The downside for Grayscale is that it would mean a loss of assets, and therefore fee income. Its filings with the SEC say it “currently has no intention of seeking regulatory approval” to start one.

source: https://www.ft.com/content/9fc7b034-7659-439f-a991-169662815883

They said it in their own filling. As you can see they can huff and puff a lot and cry publicly about evil SEC being against the little guys but all they care about is that they can offer their roach motel shares to a wider audience for a crappy 2% management fee. If that must involve institutional bagholders dumping their stupid shares on retail so be it. You don’t realize SEC is doing you a favor by blocking this garbage from reaching wider audience. Let them rot in their stupid institutional roach motel. There are already more competitive products with lesser fees so go look for them if you must and stop falling for cheap corporate populism. Iit’s always virtue signaling.

And at the end, some comedy gold for you guys

Grayscale said the price at which GBTC trades at is “subject to market forces, a risk inherent in any publicly traded investment product,” and denied it had issued too many shares.

Grayscale argued that “the most efficient way to resolve any discrepancy between GBTC’s share price and the NAV,” would be for it to be able to convert into a spot ETF, something “the US investment community is eager for . . . is ready for and deserves”.

The ones who are most eager for it are unsurprisingly the guys in charge who don’t want to empower bagholders to redeem their shares, shrink this useless fund and get paid at NAV. I don’t think retail deserves to bail out stupid whales that got harpooned and baited into bagholding useless Grayscale Roach Motel FundTM and I don’t think they deserve to provide 2% fee for those whiny, corporate leeches for perpetuity. So even if SEC caves in or they lose in court, don’t buy it. Don’t baghold it. And don’t fall for crappy corporate propaganda.