Grayscale plans to clone its bitcoin fund, which has lost billions

Grayscale Investments intends to launch a clone of the world’s biggest bitcoin fund as it loses billions to lower-cost rivals.

The asset manager submitted plans for the Grayscale Bitcoin Mini Trust, which would be physically backed by the cryptocurrency and trade under the ticker BTC, a filing Tuesday showed. 

If approved, the exchange-traded fund would be seeded with an unspecified percentage of the world’s biggest bitcoin ETF, Grayscale Bitcoin Trust (GBTC), and existing GBTC shareholders would automatically have shares of both GBTC and BTC without creating a taxable event, according to the filing.

Grayscale’s BTC plans land as investors continue to pull cash from the $28 billion GBTC, which has posted outflows of more than $11 billion — the second-most among more than 3,400 US-listed ETFs — so far this year. Investors have instead sent cash to its cheaper rivals, the bulk of which charge 0.3%, while GBTC charges 1.5% annually. 

Separately, VanEck announced Tuesday that it was waiving the fee on the VanEck Bitcoin Trust (HODL) for the first $1.5 billion in assets until March 31, 2025.

Fees for BTC aren’t yet listed, but are expected to be lower than GBTC, according to a person familiar with the matter. ETF issuers State Street Global Advisors and Invesco Ltd have both launched cheaper versions of some of their biggest ETFs.

State Street introduced the $6.8 billion SPDR Gold MiniShares Trust (GLDM) in 2018 with a 0.1% fee, undercutting the 0.4% expense ratio of the older, larger SPDR Gold Shares (GLD). Invesco went a similar route with the 2020 launch of the $22.5 billion Invesco Nasdaq 100 ETF (QQQM), which charges 0.15% annually versus the 0.2% fee on the $251 billion Invesco QQQ Trust Series 1 (QQQ).