On January 30th, Eastern Time, Grayscale Investments, the world's largest digital asset management company, announced that its Ethereum Trust (OTCQX: ETHE) was once again open to qualified investors. Grayscale Ethereum Trust had more than $4 billion in assets under management as of Jan. 29, the firm said on Monday. Private placements of shares in the trust will be made periodically throughout the year, with daily subscriptions available for qualified investments, the company said.It is reported that on June 21, 2019, Grayscale Investment Company announced that its ETH trust was officially open for trading. In December 2020, Grayscale briefly shut down trading in the Ethereum Trust.
Grayscale adds more than a dozen encrypted trusts
Last week, according to the data from the Delaware company filing website, Grayscale added 6 trusts for encrypted assets in Delaware on January 27, namely: AAVE (Aave), ATOM (Cosmos) , DOT (Polkadot), XMR (Monero), ADA (Cardano), EOS (EOSIO). Several of these are relevant to the decentralized finance (DeFi) space. As with other previously filed trusts, the registration was performed by the Delaware Trust Company, which is Grayscale's legal trustee in each state in the United States.
The underlying assets of Grayscale's newly formed trusts may each have their own unique appeal to investors. Polkadot’s DOT token has recently become the fourth largest cryptocurrency by market capitalization; like Cardano (sixth largest), EOS (17th largest) and Cosmos (26th largest), they are a form of decentralized computing network. While Aave is a popular DeFi protocol that enables users to deposit and lend cryptocurrencies on a peer-to-peer basis, Monero is a privacy coin designed to maximize blockchain privacy.Prior to this, Grayscale just filed six new encryption trusts in Delaware on January 22: LINK (Chainlink), XTZ (Tezos), MANA (Decentraland), FIL (Filecoin), LPT (Livepeer), BAT (Brave Browser's Basic Attention Token).So far, in the first month of 2021 alone, Grayscale has registered more than a dozen altcoin trusts with the Delaware Registrar of Companies, indicating that Grayscale is seeking to satisfy growing investor interest in altcoins.Grayscale CEO Michael Sonnenshein said: "Grayscale is always looking for opportunities to offer products that meet investor needs. Sometimes, we will do a trust fund booking filing, but the filing does not mean that we will launch the product to the market."Grayscale clarified in a statement that while it has no current plans to launch any of these trusts, it wants to keep the option open should the need arise. The company will announce when the new product will be available to investors at a later date.That said, the filings don’t mean the dozen or so crypto trusts will necessarily launch, but they do suggest that Grayscale asset managers are laying the groundwork for a possible launch.
Crypto Trusts VS ETFs
Clearly, Grayscale’s trust has become a popular way for investors to gain exposure to cryptocurrencies without having to trade directly. The behavior is a bit like traditional ETFs (Exchange Traded Funds), except they don't pay dividends and have a six-month lock-up period on invested funds.In addition, the trust's premium also creates a huge opportunity for arbitrage trading.Crypto trusts like Grayscale promise that investors can “acquire auditable ownership of cryptocurrencies through traditional investment vehicles,” while keeping those cryptocurrencies illiquid and offline in cold storage.That makes trusts more expensive than publicly traded bitcoin’s holy grail, exchange-traded funds (ETFs). Although some companies have been trying to launch ETF products before, there is still no real Bitcoin ETF in the United States. Previously, the SEC had delayed or even rejected applications from companies such as Gemini, Bitwise Asset Management and VanEck.Grayscale’s encrypted trust just makes up for the vacancy in the market for products such as ETFs. This has led investors willing to trade cryptocurrencies with public quotes and trusted legal advisors and auditors through traditional investment vehicles to turn to Grayscale’s trusts, such as the Grayscale Bitcoin Trust (GBTC), which manages $11.5 billion in cryptocurrencies. The BTC assets of private investors, such as Grayscale’s Ethereum Trust (ETHE), are mainly aimed at investors who want to avoid “direct purchase, storage and custody of ETH”.It should be noted that firms such as VanEck and Valkyrie Digital Assets have tried again to apply for ETFs following the resignation of SEC Chairman Jay Clayton. If the ETF passes the SEC's approval, investor interest in cryptocurrency trusts may wane somewhat.As of now, Grayscale is still the world's largest cryptocurrency investment company, currently offering eight single-crypto asset trusts, as well as a diversified digital large-cap fund. As of February 1, the total asset management scale of Grayscale Corporation reached 26 billion US dollars, of which Grayscale Bitcoin Trust (GBTC) alone exceeded 21.8 billion US dollars.In addition, according to Grayscale's latest report for the fourth quarter of 2020, last year, the investment in Grayscale's series products exceeded US$5.7 billion, more than four times the cumulative US$1.2 billion that flowed into our products from 2013 to 2019.
