Grayscale Plans to Offer More Digital Asset Products to Meet Rising Investor Demand
Nicholas Otieno Feb 27, 2021 04:19
Grayscale Investments LLC has announced plans to explore other digital assets.
Grayscale Investments LLC, the world’s largest digital currency asset manager, has announced that it is considering several new digital assets for potential new products. In this way, the New York-based company continues seeking ways to better meet the rising investor demand for exposure to digital assets through regulated, secure, and familiar investment products.
The company is currently considering the following digital assets: Aave (AAVE), Basic Attention Token (BAT), Cardano (ADA), Chainlink (LINK), Compound (COMP), Cosmos (ATOM), Decentraland (MANA), EOS (EOS), Filecoin (FIL), Flow (Dapper Labs) (FLOW), Livepeer (LPT), MakerDao (MKR), Monero (XMR), Numeraire (NMR), Polkadot (DOT), Reserve Rights (RSR), Stacks (STX), Sushiswap (SUSHI), Synthetix (SNX), Tezos (XTZ), The Graph (GRT), Uniswap (UNI), and Yearn Finance (YFI).
Grayscale CEO, Michael Sonnenshein, said: “We may not turn each of these assets into one of our landmark investment products. But as a firm that has been on the vanguard of connecting the legacy financial system with the new, digital currency-driven financial system, we view it as our responsibility to introduce investors to more diversity in this space.”
The process of establishing an investment product structured similarly to those that the company already provides a significant consideration and review, and is subject to enormous internal controls, regulatory considerations, and adequately secure custody arrangements. Therefore, there is no guarantee that the assets mentioned above list would get a corresponding investment product. The firm said that any newly-created products will be announced separately upon launch.
Grayscale currently offers eight single asset investment trusts including (Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Horizen (ZEN), Litecoin (LTC), Stellar Lumens (XLM), and Zcash (ZEC). The firm also provides one diversified fund (Grayscale Digital Large Cap Fund) that offers exposures to top cryptocurrencies by market capitalization.
Emergence of New Competitors
Grayscale’s trusts help investors gain exposure to digital assets through a more traditional investment vehicle by purchasing its publicly listed shares.
However, this year has witnessed the launch of multiple competing products. For example, Bitcoin Exchange-Traded Funds (ETFs) are gaining traction as new competitors for Grayscale are emerging. Last month, Osprey Funds LLC launched an over-the-counter (OTC) Bitcoin Trust similar to Grayscale’s Bitcoin Trust (GBTC). Besides that, ETFs seems to be taking off in Canada. During this month, the Ontario Securities Commission, Canada’s securities regulator, approved the launch of Purpose Bitcoin ETF by Purpose Investment Inc Toronto-based asset management firm. Evolve Funds Group Inc. also launched its Bitcoin ETF that started trading on the Toronto Stock Exchange.
The rising competition has impacted Grayscale’s business. Specifically, competition may erode the demand for the Grayscale Bitcoin Trust (GBTC) product, which could result in a collapsing premium or even a discount. GBTC currently holds more than 655,750 Bitcoins worth of $31.6 billion. However, this week the $31.6 billion has dropped by 21% as investors have rushed to sell off their holdings.
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