Couple of questions regarding Grayscale's GBTC

[a298b112]

So we saw the news yesterday, and here I am trying to understand what is GBTC and how it works. Please bear with me and explain like if I am 5.

1. First question, what is GBTC? Is it a stock issued by Grayscale? Or something else?
2. Where does GBTC traded?
3. Can GBTC be traded among retails investors? Or only Grayscale sells it?
4. If Grayscale sells it to retails investors, do they also buy real BTC for the money they earn?
5. Is there anyway to confirm they are actually holding BTCs?
6. What will be the result of transforming GBTC to spot BTC ETF? I mean why is this big news? And why Grayscale want to transform it into ETF?

Any resources that explain how Trust works also will be appreciated.

[SeriouslyGiveaway]

Grayscale is a company that provides many services and products. Bitcoin Spot ETF is a next product is going to be provided by Grayscale if it is approved by SEC.

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

Ask fillippone.

[fillippone]

Grayscale is a company that provides many services and products. Bitcoin Spot ETF is a next product is going to be provided by Grayscale if it is approved by SEC.

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

Ask fillippone.

Yes OP, all your doubts will be answered in the above thread.
Here I would only specify that Grayscale ETF wouldn’t be a new product, but the conversion of GBTC, where the T stands for “Trust” into and ETF.

[ethrhinoceros]

1. GBTC stands for "Grayscale Bitcoin Trust." It's kind of like a special container that holds something called Bitcoin. It's not exactly a stock, but it's similar. You can think of it as a way for people to own a piece of Bitcoin without actually having to buy and keep the Bitcoin themselves.

2. GBTC is traded on something called the stock market. It's like a place where people can buy and sell shares of companies and trusts. So, just like you can buy shares of your favorite toy company, people can buy and sell shares of GBTC.

3. Yes, regular people like you and me can buy GBTC shares! You don't have to be Grayscale to buy them. It's like buying a piece of a big box of toys without needing to own the whole box.

4. When people buy GBTC shares, the money they spend goes to Grayscale. Grayscale then uses some of that money to buy real Bitcoin. So, yes, they use the money they earn to buy Bitcoin. It's like trading your toy money for real toys.

5. It can be a little tricky to see exactly what they have, but Grayscale is supposed to tell everyone how much Bitcoin they have. They usually do this in reports. So, people can check these reports to see how much Bitcoin Grayscale says they have.

6. Turning GBTC into a spot Bitcoin ETF is a big deal! An ETF is like a special way to buy and sell things on the stock market. If GBTC becomes a Bitcoin ETF, it means even more people might want to buy it because it's easier to trade. This is big news because it could make it simpler for lots of people to invest in Bitcoin. Grayscale might want to do this because it could attract even more investors, and more people might want to use their Bitcoin trust.

For more detailed information and to better understand how trusts like GBTC work, you can visit the U.S. Securities and Exchange Commission (SEC) website. They have resources about investment trusts and how they operate: https://www.sec.gov/

When trading, this helps in doing a quick background check: https://backgroundcheckrepair.org/totally-free-background-check-no-credit-card-needed/

[odolvlobo]

4. When people buy GBTC shares, the money they spend goes to Grayscale. Grayscale then uses some of that money to buy real Bitcoin. So, yes, they use the money they earn to buy Bitcoin. It's like trading your toy money for real toys.

That is not accurate. When a person buys shares of GBTC, the money goes to the previous owner of the shares. However, when allowed, a person can also deposit bitcoins into the trust and receive newly issues shares in exchange.

6. Turning GBTC into a spot Bitcoin ETF is a big deal! An ETF is like a special way to buy and sell things on the stock market. If GBTC becomes a Bitcoin ETF, it means even more people might want to buy it because it's easier to trade. This is big news because it could make it simpler for lots of people to invest in Bitcoin. Grayscale might want to do this because it could attract even more investors, and more people might want to use their Bitcoin trust.

That is not accurate. The problem with a trust is that while depositing bitcoins and receiving shares is straightforward, redeeming the shares and receiving bitcoins is not. The result is that the price of a share can diverge from the value of the bitcoins it represents. An ETF has a different structure. An ETF also has a mechanism for redeeming shares, so it fixes that problem.

One reason that Grayscale wants an ETF may be that the amount of money Grayscale makes depends on the size of the trust and the trust cannot grow when shares are selling at a discount. If GBTC becomes an ETF, its size would no longer be restricted in this way

[fillippone]

4. When people buy GBTC shares, the money they spend goes to Grayscale. Grayscale then uses some of that money to buy real Bitcoin. So, yes, they use the money they earn to buy Bitcoin. It's like trading your toy money for real toys.

That is not true.
Or better, you have to specify.
If you are an accredited investor and can access the primary market, then the above statement is true.
If you instead access the secondary markets, the one usually accessible to common investors, then you are trading with another shareholder, Grayscale is not involved in the trade, so the money goes to the shard seller.
Please note that the primary market has been closed for a few years (it' wouldn't make sense to open it with a negative discount on the secondary market).

Again all this is explained I'm my thread.

Edit: While typing I saw this very good reply:

That is not accurate. When a person buys shares of GBTC, the money goes to the previous owner of the shares. However, when allowed, a person can also deposit bitcoins into the trust and receive newly issues shares in exchange.

Indeed, when the primary market is open you can either deposit cash or deposit Bitcoin (in-kind purchases) to buy shares.
But again, this possibility has been closed for a few years now.

[CoinPunkz]

1. What is GBTC?: GBTC is the Grayscale Bitcoin Trust, an investment vehicle that allows you to invest in Bitcoin through the stock market. It's not a stock but rather a trust that holds Bitcoin.

2. Where is GBTC Traded?: GBTC is publicly traded and can be bought and sold on the OTCQX, an over-the-counter market.

3. Retail Investors and GBTC: Yes, retail investors can trade GBTC. You don't need to go through Grayscale directly to buy it; it's available on several trading platforms.

4. Grayscale and Real BTC: When you buy GBTC, Grayscale uses the money to purchase actual Bitcoin, effectively backing the trust with real assets.

5. Confirming BTC Holdings: Grayscale is subject to periodic audits to verify their Bitcoin holdings, and they publish these reports, offering some level of transparency.

6. GBTC to Spot BTC ETF: Transforming GBTC into a spot BTC ETF would be significant because ETFs come with a different set of regulatory approvals and would likely attract more institutional investors. Grayscale aims to convert to better align with these market demands.

Hope this clears up any confusion you may have.

[bitmover]

Here I would only specify that Grayscale ETF wouldn’t be a new product, but the conversion of GBTC, where the T stands for “Trust” into and ETF.

6. GBTC to Spot BTC ETF: Transforming GBTC into a spot BTC ETF would be significant because ETFs come with a different set of regulatory approvals and would likely attract more institutional investors. Grayscale aims to convert to better align with these market demands.

Just to expand those previous answers, Grayscale wants to convert to an ETF because it will reduce the spread, or the discount rate, between BTC price and the Grayscale fund price.

ETF allows more flexibility to create and burn shares, which allows to the ETF manager to reduce this spread between the target asset price and the   ETF price.

Source:

That’s because the trust, known by its GBTC
 ticker, has traded at an average 25% discount to the price of its underlying asset since early 2021, a discount that should disappear upon conversion, the company said.



https://www.cnbc.com/2022/05/11/grayscale-tells-sec-that-turning-biggest-bitcoin-fund-into-etf-will-unlock-8-billion-for-investors.html

This is critical for the long term health of the GBTC fund.

[a298b112]

that is interesting... basically if you buy now GBTC with ~17% discount to the asset (BTC), once it will become ETF, and the discount will disappear, you will make some money... right? why people are not rushing to buy?

[un_rank]

that is interesting... basically if you buy now GBTC with ~17% discount to the asset (BTC), once it will become ETF, and the discount will disappear, you will make some money... right? why people are not rushing to buy?

Maybe cause there is no guarantee that the ETF request will be approved.

GBTC has traded for higher discounts in the past and investors willing to take a gamble on it will be rewarded if it gets converted to an ETF, but it is a long road to get approval from the SEC and then to be converted from a trust fund to an Exchange traded fund.

- Jay -

[ImThour]

let me answer all of your questions with one answer. GBTC is a crap, built by a crap company for people who are crap with computers & technology.
If you know how to use a computer and how to register on an exchange, you don't need to worry about what GBTC is. The only reason why it has a lot of discount is because it's a crap.
Hope this answers your question.

[odolvlobo]

3. Retail Investors and GBTC: Yes, retail investors can trade GBTC. You don't need to go through Grayscale directly to buy it; it's available on several trading platforms.

4. Grayscale and Real BTC: When you buy GBTC, Grayscale uses the money to purchase actual Bitcoin, effectively backing the trust with real assets.

#3 and #4 contradict each other because #4 is not accurate.

#4 should should say that a person can deposit bitcoins into the trust and receive newly issued shares in exchange, and that Grayscale manages that process.

[letteredhub]

let me answer all of your questions with one answer. GBTC is a crap, built by a crap company for people who are crap with computers & technology.
If you know how to use a computer and how to register on an exchange, you don't need to worry about what GBTC is. The only reason why it has a lot of discount is because it's a crap.
Hope this answers your question.

Lol...
I don't think this answers op question to the meaning of what he has asked to know.  If you had gone ahead to explain to him what GBTC really means and how it's  operation as a spot ETF by approval of the  SEC.  And then also open up to why you conclude it to be a crap it would have made more sense than just calling it a crap even though some of us share same sentiment.