Osprey Funds is a digital assets-focused investment manager that is looking to take over management of Grayscale’s bitcoin trust (GBTC) amidst mounting public pressure against the troubled vehicle. In an open letter to Barry Silbert, the CEO of Digital Currency Group (DCG) – the parent company of Grayscale Investments, Osprey’s CEO Greg King expressed his company as the “best-positioned third party” to manage the trust. Currently, GBTC has roughly $12 billion in assets and imposes a 2% management fee, which is increasingly criticized as unreasonable compared to passive crypto products.
If appointed as GBTC’s manager, Osprey plans to cut the management fee by roughly 75% to 0.49% per year. They also aim to implement a redemption program, seeking to address the nearly 40% discount that GBTC has been trading at compared to its net asset value (NAV). Grayscale sued the SEC in June after its proposal to convert GBTC to an ETF was denied, leading to an ongoing legal dispute. The company believes that converting GBTC to an ETF could help address the discount to its underlying bitcoins.
In a bid to take over GBTC, Osprey’s proposal follows Valkyrie Investments’ proposal from earlier this year, which suggested facilitating orderly redemptions at net asset value and lowering the fee to 0.75%. Osprey’s proposal of a 0.49% fee aims to set a new standard for lower fees within the industry. This move comes on the heels of a lawsuit by hedge fund firm Fir Tree Partners alleging mismanagement of GBTC and demanding private information from Grayscale.
Despite Grayscale’s CEO Michael Sonnenshein stating that the company is not interested in offering a redemption program, Osprey and other firms are pushing for a solution to address the discount and improve investor confidence. The ongoing legal disputes and public pressure have led to an online campaign offering GBTC investors a credible path to redemptions. As the competition to manage GBTC intensifies, it remains to be seen how Grayscale and DCG will respond to the various proposals put forth by Osprey and other investment firms.
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