Buoyed by cash cow and under new CEO, Grayscale files for IPO just days after it blogged about Bonk, Playtron, and Binance coins, possibly being in its future

Grayscale Investments filed for an IPO today (July 14), just three months after it filed to sell a Solana ETF and 11 months after it hired a new CEO from Goldman Sachs to chart a future that goes beyond its GBTC cash cow.

The Stamford, Conn. cryptocurrency manager of $43 billion in AUM – including $19 billion in its Grayscale Bitcoin Trust ETF with a staggering 1.5% fee -- filed cryptically, err, confidentially, with the Securities and Exchange Commission (SEC) to list its shares on the Nasdaq stock exchange. 

The press release and the filing reveal little more than its intent to achieve liquidity.

Grayscale, founded in 2013, and owned by Digital Currency Group (DCG), has been seeking a fresh way forward. It achieved enormous success by putting Bitcoin inside a closed-end fund -- Grayscale Bitcoin Trust Co., GBTC.-- and charging 200 basis points.

DCG itself just keeps plowing investment into hundreds of crypto-related startups. It converted the fund to an ETF after fighting the SEC for the right to do so. 

It only lowered the fee to 150 basis points, despite Fidelity selling the Wise Origin Bitcoin Fund EFT (FBTC) and BlackRock selling its iShares Bitcoin Trust ETF (IBIT) among others at a fraction of the cost – typically 25 basis points. See: The RIA business can heave a sigh of relief as Grayscale beats the SEC in court and its GBTC fund soars in value

GBTC still generates about $280 million in cash flow annually at its current AUM level.

Steadfast holders

Despite Bitcoin soaring in price this year, the GBTC ETF's total assets have been fighting an uphill battle. Starting the year at about $19 billion, they stand only a fraction higher today – albeit up from the $15.9 billion of AUM on March 31.

On March 31, bitcoin's price stood at $82,336 but closed today at about $120,000, nearly a 50% jump.

But don't expect GBTC to melt like an ice cube in Arizona, regardless of the fee, says Ric Edelman, founder of the Digital Assets Council of Financial Professionals.

“Grayscale is correct that many existing owners of GBTC won’t sell,” he says. 

“After all, they haven’t in the 18 months since the other ETFs (and Mini) entered the market. For some, it’s inertia. For others, it’s the desire to avoid the tax they’d incur to sell.”

Nor does Edelman see Grayscale as a one-trick pony – or dependent on RIA assets.

“Grayscale is one of the largest --and maybe the largest -- crypto-only asset managers,” he says. "They offer many more funds than just GBTC. And because GBTC’s fee is high, Grayscale offers GBTC Mini, at only 15 bps. 

“Sure, a fiduciary would recommend the new less expensive option. But most advisors aren’t fiduciaries – and many retail investors don’t know there’s a Mini to consider.”

Considering bonk

Grayscale also has new blood in Peter Mintzberg, a former McKinsey consultant and Harvard MBA who it brought aboard from Goldman Sachs in August 2024. He fills the CEO slot after a search going back to 2023.

“I’ve long admired Grayscale’s position as a leading crypto asset management firm, and I am honored to join the most talented and pioneering team in the business," he said in the release announcing his hire. 

"This is an exciting time in Grayscale’s history, as we continue to capitalize on the unprecedented momentum in the asset class.” 

On July 10, it published a blog with a new coinage of “assets under consideration” as a piece of its emerging vision. It is considering: Bonk, Playtron and Binance Coin among others.

 It filed for the Grayscale Solana Trust (GSOL) ETF in April.  

It gives investors exposure to the token underlying the Solana platform (SOL) in the form of a security while avoiding the challenges of directly buying, storing, and safekeeping SOL, according to the company.

More than ETF

Though a first-mover in getting Bitcoin inside of funds, Grayscale is now a follower with its IPO filing.

Circle Internet Group had a $1.1-billion IPO and Gemini filed earlier this year.

Though Mintzberg pulled the trigger on filing for an IPO to put more capital at his fingertips – and perhaps cash-in on hiring incentives – he will also be inviting far more intense scrutiny on Grayscale's direction from here.

Edelman is a believer that Grayscale is about more than its GBTC product.

“This IPO isn’t about GBTC – it’s about Grayscale,” he says.