Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

[fillippone]

then from 2025 we will see the central banks being able to hoard and grab bitcoin as business reserve(though current drafts only allow 2-5% of there collateral/reserves to be bitcoin)

I have very strong view against this projection. Central banks are known for having a very strict tolerance for those to try to steal the power from them. So I don't expect them adopting bitcoin as it would be a self-inflict damage.  

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[franky1]

then from 2025 we will see the central banks being able to hoard and grab bitcoin as business reserve(though current drafts only allow 2-5% of there collateral/reserves to be bitcoin)

I have very strong view against this projection. Central banks are known for having a very lax tolerance for those to try to steal the power from them. So I don't expect them adopting bitcoin as it would be a self-inflict damage.  

here is the thing
central banks are the mother cash provider to commercial banks and sister to the tax - treasury..
central banks are not the banks that customers have accounts with
they print the money. but dont give it to citizens direct

when commercial banks make mortgage agreements(in digital account balance) the COMMERCIAL BANK has to hold a % of paper money to keep ATM's filled to meet any expected cash daily withdrawals. meaning central banks only make profit to fill the treasury when commercial banks make debt
central banks make NO profits(to put into treasury) when people move their bank balance via visa/mastercard

the IRS get taxes when money moves between users(income/gains) and yes the IRS get taxes on gains of crypto. so crypto is not a threat its actually peoples reliance on visa/mastercard that has reduced central banks profits for treasury

which is why central banks want to bring the "fast payments"/"tap and pay" into the fold of central-commercial banks. rather than the likes of visa/mastercard who are making 2% tx fee where banks get nothing

central banks also. had international rules (IMF/BIS) where they could only hoard certain currency as reserves(leaning favour to the petro dollar) it was the central banks that begged BIS for a 5% ability to hoard decentralised cryptos like btc. and a random % of certain stable coin. where by the BIS compromised in the draft protocol for 2025 to be 2% (currently 0% still)

so its not the central banks hate of crypto. its their aversion to risk due to their BIS rules they follow
and again the central bank hoard of crypto is not about consumer level/retail service offering to customers of btc. its the central bank internal investment for the central bank profiting(adding more value to the national treasuries)

central banks are a business, but so is the IRs . and together they only make profit to feed the treasury when money moves/is swapped(wire transfers and debt creation). they dont make money on people saving it or microspending it on debit cards. so if people are trading currencies via wire transfering fiat to create another persons/businesses 'income' to increase. and creating debt. then central banks get profit

they dont see crypto "taking over" fiat/cbdc becasue of min wage, tax, fines, debt laws that keep fiat/cbdc in circulation

they see crypto as a open option currency to move in and out of. meaning wire transfer commercial bank payments to make and destroy account balance meaning  destroying 'cash' for free to then make commercial banks buy fresh 'cash' and IRS tax on those incomes when swaps are done

[fillippone]

I am quite familiar with the banking system plumbing, and while I share the usual concerns about CBDC, I am also curious about how the CB’s are going to implement it without damaging the banking system.

When I told you CB are against BTC or crypto I was indeed referring to the loss of control embedded in this choice: CB don’t want to give up the very powerful monetary policy control.

[franky1]

I am quite familiar with the banking system plumbing, and while I share the usual concerns about CBDC, I am also curious about how the CB’s are going to implement it without damaging the banking system.

When I told you CB are against BTC or crypto I was indeed referring to the loss of control embedded in this choice: CB don’t want to give up the very powerful monetary policy control.

they dont lose control
CB still have control. the main circulating currency is done via tax, debt, min wage LAWS

what your confused about is the citizen level savings/spending.. which is not central bank control. its the commercial bank service
central banks dont care about that. they only care about making profit at the top end. which they can increasingly do by ridding the 3rd layer services like visa/mastercard and just have a 2 layer system of central-commercial banks

anyway
central banks have wanted to invest in crypto (for their internal investments of corporate profit). central banks dont offer citizen accounts. of fiat or cbdc or crypto. never have
central banks want to hold crypto but were stopped by the IMF/BIS. but that looks to change in 2025

..
separately from that. at the commercial-citizen level. we are seeing big institutions offering crypto gateways/investment schemes and such

we will see more of blackrock/ark doing deals for trusts, mining and exchanging, both at public spot(CEXand DEX) and also at private OTC

now getting to this topics point
while some call grayscale a killer whale. there are bigger whales(blue/humpback) such as ark/blackrock that would love to take over DCG's positions

[Daltonik]

DCG has started selling shares of crypto trusts in Grayscale, stating that this is simply a rebalancing of its portfolio. FT says that DCG recently sold shares of the ethereum fund, we are talking about selling 25% of the fund's shares for $ 22 million at several auctions since January 24. The company sells for about $8 per share, the last time DCG sold shares of the ethereum fund was in 2021.

Indeed, why DCG does not allow investors to buy back their shares for coins held in trusts.the answer is simple too much income is generated by interest on asset management.

Source: https://www.ft.com/content/abee7e2e-1d18-4a68-aac5-665869db250f

[franky1]

ethereum (spot) is at a high speculative premium hype price on retail markets(CEX)
whilst bitcoins is still at a low speculative price on retail markets

so a good business plan is for DCG to offload ethereum backed shares(ETHE otc) rather than bitcoin backed shares

(as soon as "unstaking" is allowed on ether PoS there will be a mass sell of correction of eth to its new corrected LOWER value of 95% less than current. so a great time to sel on a high)

[fillippone]

DCG has started selling shares of crypto trusts in Grayscale, stating that this is simply a rebalancing of its portfolio.
<...>

Guess what?
The discount reacted immediately.



No big surprises here, just self-inflicted harm.
Pointing south and heavy.

[franky1]

this DCG sell off. is not the same thing as proposed last month. where Grayscale would buy back some shares

this is DCG (mother) selling mother shares back to the OTC market. flooding the market thus excess supply, lower demand

seems DCG doesnt have free cashflow to over all of its bills(debts) so is selling off assets including its news media website coindesk

firing employees, selling assets and also sister companies.. seems DCG is not healthy at all

and these shares being sold and coindesk(if sold) wont total the amount needed to clear all debts

actually come to think of it.. running some scenarios through my head while writing the aboce
imagine DCG had 1000 shares of $7.10 (simplifying the numbers for demo)
which were rated as locking to 1000 x $15.41 of ethereum.

DCG can sell their shares for $7.1k and later if grayscale done the 'share buyback' proposal grayscale can buyback 1000 shares for now under $7.1k (using a loan from DCG)
which then means they 'could ' by disassociating 1000 shares from the trust..  then remove $15.41k of ethereum from the trust

thus keep all other customers locked in whilst freeing up ether for half of ethers price.. but that would involve the second phase(proposed last month(buyback)) happening for them to gain from it

[fillippone]

this is DCG (mother) selling mother shares back to the OTC market. flooding the market thus excess supply, lower demand

Something big must be happening if DCG (mother)  is in bad financial situation while Grayscale (daughter) is cashing in 30 BTC in daily management fees doing basically nothing.

[franky1]

this is DCG (mother) selling mother shares back to the OTC market. flooding the market thus excess supply, lower demand

Something big must be happening if DCG (mother)  is in bad financial situation while Grayscale (daughter) is cashing in 30 BTC in daily management fees doing basically nothing.

well upto ~feb/march 2021 grayscale were accumulating coin into the trust
but since then they have been reducing how much coin is in the trusts
https://www.coinglass.com/Grayscale#Holdings (blue background)
the straight downward slope from spring 2021 is the 2% management fee per year but nibbled out of the trust at a smaller daily rate that totals the yearly amount of 2% removed

we just have to see if they do do the "buy back scheme" to allow them to bite a huge 20% chunk out of the trust

[fillippone]

the straight downward slope from spring 2021 is the 2% management fee per year but nibbled out of the trust at a

The straight blue line is declining at a 34 daily BTC, or the daily 2% on the total amount of the AUM in bitcoin.
Daily means on the Mondays they are getting three times the amount…

[Daltonik]

Grayscale CEO Michael Sonnenshein gave an interview to yahoo finance where he shared his opinion about the development of the crypto market in 2023, about the upcoming court hearings in the case of Grayscale against the SEC and the possible sale of 20% of shares in accordance with plan B, which, however, he considers the worst way out.. He also expressed his opinion about discounted sales of positions in crypto trusts that DCG started, well, as an opinion, he just shared what is already known to the public and said that this is not the business for which he is responsible. Michael Sonnenshein also shared how Grayscale operates in the crypto winter and talked about meeting with congressmen and increasing Washington's involvement and support in cryptography and the adoption of some laws in 2023 to regulate centralized intermediaries.

Actually, we didn't hear anything new, just Michael Sonnenshein commented on current events and talked mainly about regulation in the field of crypto, but the most important thing is that he finally sees an understanding of finding solutions to the problems of the crypto market on the part of both chambers of Congress

https://finance.yahoo.com/video/grayscale-ceo-talks-crypto-regulation-173013258.html?fr=sycsrp_catchall
https://www.youtube.com/watch?v=GonIQD9Xp_Q

[franky1]

the straight downward slope from spring 2021 is the 2% management fee per year but nibbled out of the trust at a

The straight blue line is declining at a 34 daily BTC, or the daily 2% on the total amount of the AUM in bitcoin.
Daily means on the Mondays they are getting three times the amount…

point was
they have not been adding coin to their trust(not investing since spring 2021).. they have been taking coin out and only taking coin out since spring 2021

if i seen bitcoins cheap opportunity in winter 2022 i would have been on a buying spree(i have a hoard from 2012-    and even i bought more in 2022 even though i am financially sustainable i couldnt turn a good opportunity down compared to 2021 prices)

when a business is syphoning out (taking its fees) and not investing. and now saying it needs to do stuff to take out another 20% (way above its 2%) its not a good sign

this winter should be investing in and not divesting out

if they were happy to buy more coins in jan-feb 2021 at $30k-$50k
but said no to opportunities of $<$20k..

it shows they are not on a healthy standing

[fillippone]

it shows they are not on a healthy standing

They are probably using a lot of those daily 33 BTC to bribe someone at the SC not to have the ETF approved!
This would put their lucrative business model immediately out of the market.
I know they pretend they are pushing for an ETF conversion, but who really want to kill their own golden goose?

[OgNasty]

it shows they are not on a healthy standing

They are probably using a lot of those daily 33 BTC to bribe someone at the SC not to have the ETF approved!
This would put their lucrative business model immediately out of the market.
I know they pretend they are pushing for an ETF conversion, but who really want to kill their own golden goose?

It is an odd position where they make more money with a shitty product that loses its investors money but claim to be trying to change said product to make less money. Simultaneously, the organization setup to protect investors from bad investment products are blocking conversion of the fund, which would benefit investors and in effect punish the issuer. It all seems backwards to the point something is fishy. 

[franky1]

regulators are not politicians put in place to protect the wealth of citizens

regulators are ex bankers promoted to supervisor roles to protect banks and do a bit of policing of bank customers that can harm a banks reputation(cause bank runs if banks are fined or sent to court)

regulators dont want newbie businesses attaining the same competitive status as banks that offer pension plans so ofcourse the first ETF is not going to be managed by some company that only existed under a decade ago.. they want the wall street elite to offer the first ETF. is just the regulators want to have the rules (walls" in place to ensure the elite banks still have a role to play in the evolving finance sector

[Daltonik]

Michael Sonnenshein gave a rather lengthy interview to Peter McCormack in the podcast "What Bitcoin Did" Where he talks about the formation and development of Grayscale, his role in it, and also concerns the serious problems that Grayscale is currently experiencing. For example, GBTC is trading below its NAV value around a record low of 45%. And since GBTC holders cannot buy back their shares for the underlying asset, they have to sell their shares on the open market and take on this discount, and those who are not forced to sell feel actually trapped. Sonnenshein believes that if the GBTC fund were converted into an ETF, there would no longer be a discount or premium, but an arbitration mechanism would be built in, which would allow $2 billion to return to investors' pockets, since, as he believes, the GBTC fund would recover to the value of NAV.
He also touched upon the issues of the relationship of subsidiaries with DCG and the bankruptcy of Genesis.

The less time is left before the Grayscale vs SEC court hearing, the more often Sonnenschein participates in various interviews, in this, for example, he talks in some detail about the mechanism of the GBTC fund and the benefits for investors when converting it into a spot ETF. He was also very surprised by the fact that by refusing to convert, the SEC actually refused to protect investors.

Video: https://www.youtube.com/watch?v=1DNlQEp2etg   Audio version: https://www.whatbitcoindid.com/podcast/grayscale-the-sec-genesis  https://podcasts.google.com/feed/aHR0cHM6Ly93d3cud2hhdGJpdGNvaW5kaWQuY29tL3BvZGNhc3Q_Zm9ybWF0PXJzcw?sa=X&ved=0CAMQ4aUDahgKEwio4u-LubX9AhUAAAAAHQAAAAAQjgQ

[JayJuanGee]

Michael Sonnenshein gave a rather lengthy interview to Peter McCormack in the podcast "What Bitcoin Did" Where he talks about the formation and development of Grayscale, his role in it, and also concerns the serious problems that Grayscale is currently experiencing. For example, GBTC is trading below its NAV value around a record low of 45%. And since GBTC holders cannot buy back their shares for the underlying asset, they have to sell their shares on the open market and take on this discount, and those who are not forced to sell feel actually trapped. Sonnenshein believes that if the GBTC fund were converted into an ETF, there would no longer be a discount or premium, but an arbitration mechanism would be built in, which would allow $2 billion to return to investors' pockets, since, as he believes, the GBTC fund would recover to the value of NAV.
He also touched upon the issues of the relationship of subsidiaries with DCG and the bankruptcy of Genesis.

The less time is left before the Grayscale vs SEC court hearing, the more often Sonnenschein participates in various interviews, in this, for example, he talks in some detail about the mechanism of the GBTC fund and the benefits for investors when converting it into a spot ETF. He was also very surprised by the fact that by refusing to convert, the SEC actually refused to protect investors.
Video: https://www.youtube.com/watch?v=1DNlQEp2etg   Audio version: https://www.whatbitcoindid.com/podcast/grayscale-the-sec-genesis  https://podcasts.google.com/feed/aHR0cHM6Ly93d3cud2hhdGJpdGNvaW5kaWQuY29tL3BvZGNhc3Q_Zm9ybWF0PXJzcw?sa=X&ved=0CAMQ4aUDahgKEwio4u-LubX9AhUAAAAAHQAAAAAQjgQ

I did not watch the video, but I listened to it a day or two prior to your post, Daltonik.... and it would be good to note, that McCormack was a bit combative in his interview, and at first, I was fine with it, but towards the end it became a bit more and more uncomfortable because McCormack was increasingly being more direct in his assertion that Sonnenshein was lying.  At first, McCormick was just framing it as public relations' spin, but McCormack became more and more accusatory in terms of suggesting that Sonneshein knows more than what he is saying and that Sonnenshein is being disingenuine in the way that he is spinning matters and refusing to share some internal details.

Personally, I do think McCormack might have gone overboard because especially Grayscale has the lawsuit against the SEC and also some somewhat combative disputes with Gemini.. through the Genesis sister company.. and McCormack was largely accusing Sonnenshein of being too protective of Barry Silbert.. and even several times proclaiming that part of the problem is their pursuit of money and getting involved in shitcoins too.. .. but whatever.. some of this will hopefully end up being ironed out in the coming months.. and surely there is the SEC hearing that is about to happen and doubtful that Grayscale will win that (oh and Peter suggests that they are not even really trying to fight to get an ETF.. they are just going through the motions... blah blah blah.. because they like the fees that they continue to earn)... and then also, there is the tentative settlement between Genesis and Gemini (and other Genesis creditors) in connection with the forced Bankruptcy filing..... so we still have to see how those matters are going to be worked out in the coming months.. or perhaps dragging out longer.. I believe that there are some ways that resolution could come easier with some of the bankruptcy "holes" if the BTC price goes shooting up.. but of course, there are even complications with the SEC filings against Gemini and Genesis regarding the "earn" products that the SEC claims should not have had been even had been being offered without proper registration with the SEC.. and probably inadequate disclosures, too.. even presuming that any of the clients using those products might not have been eligible investors... and surely some of the bitcoin and crypto proponents find some of the security regulation requirements in regards to "eligible investors" to be way too patronizing for current times, which likely many of us likely have mixed views in regards to how restrictive is restrictive enough to "protect" consumers while at the same time not prohibiting normies from being able to invest or to make some of their own choices regarding their investment choices without having to ask permission to be scammed.

[franky1]

here is the thing
when grayscale says its got a trust..
meaning it tries to separate its corporation liability away from ownership of the trust(the purpose of a trust). and saying the trust is "owned/benefits" by its share holders
this means grayscale should be more transparent to the holders
(^ mccormack see's things from this side ^)

reality is that. (v sonnenscheins prospective v)
grayscale own the trust and the coin and its not actually the share holders owning the coin in the trust, thus they dont want to disclose things which can hurt their business if revealed

which is why mccormick was pressing sonnenschein for more details in the end. as he was siding with the view of how things are affecting share holders (un)informed investment.. rather then siding with how things can affect grayscale

mccormack was asking from the side of consumer/user protection. sonnenschein was answering from the side of corporate protection

investors should be informed about what they are getting into. and anyone denying disclosure seems shady, anyone shouting the utopian best case, while avoiding explaining the real events seems shady
as soon as sonnenschein said "silbert is a visionary" it really shown sonnenschein was just positive spinning everything and trying to say silbert didnt get involved but he is super-god work-husband and everyone should not speak ill of him denying that silbert ever was informed/knew about genesis things and avoiding answering if silbert ever talked about risks with sonnenschien
kinda bad business if there are known risks but parent company doesnt inform its different teams or mitigate that risk

as for the SEC thing..
if i was a regulator seeing an application of a ETF that "promises" to trace the bitcoin price.. yet. right now in its private OTC offering its NAV has NEVER pegged bitcoin 1:0.001.. i too would not want to approve such an offering that is already breaking its peg promise of exposure to bitcoin at a trace rate

[JayJuanGee]

here is the thing
when grayscale says its got a trust..
meaning it tries to separate its corporation liability away from ownership of the trust(the purpose of a trust). and saying the trust is "owned/benefits" by its share holders
this means grayscale should be more transparent to the holders
(^ mccormack see's things from this side ^)

reality is that. (v sonnenscheins prospective v)
grayscale own the trust and the coin and its not actually the share holders owning the coin in the trust, thus they dont want to disclose things which can hurt their business if revealed

which is why mccormick was pressing sonnenschein for more details in the end. as he was siding with the view of how things are affecting share holders (un)informed investment.. rather then siding with how things can affect grayscale

mccormack was asking from the side of consumer/user protection. sonnenschein was answering from the side of corporate protection

investors should be informed about what they are getting into. and anyone denying disclosure seems shady, anyone shouting the utopian best case, while avoiding explaining the real events seems shady
as soon as sonnenschein said "silbert is a visionary" it really shown sonnenschein was just positive spinning everything and trying to say silbert didnt get involved but he is super-god work-husband and everyone should not speak ill of him denying that silbert ever was informed/knew about genesis things and avoiding answering if silbert ever talked about risks with sonnenschien
kinda bad business if there are known risks but parent company doesnt inform its different teams or mitigate that risk

as for the SEC thing..
if i was a regulator seeing an application of a ETF that "promises" to trace the bitcoin price.. yet. right now in its private OTC offering its NAV has NEVER pegged bitcoin 1:0.001.. i too would not want to approve such an offering that is already breaking its peg promise of exposure to bitcoin at a trace rate

I don't really agree with you on either of those points, but I appreciate your fairly clearly providing your perspective on each of the two topics....