Bernstein Compliant Crypto ETF Can Boost U.S. Market Share as a Bitcoin On-Ramp.

According to a research report by Bernstein on Monday, Grayscale runs the largest bitcoin asset management product, a $19 billion BTC trust (GBTC). However, its dominant position may be at risk as investment giant Blackrock (BLK) has filed for a spot bitcoin exchange-traded-fund (ETF) in the U.S. Grayscale earns around $380 million in annualized fees despite the product being inefficient, illiquid, and has traded at a significant discount over the last 28 months. Although the U.S. Securities and Exchange Commission (SEC) has approved multiple bitcoin futures ETFs, it has yet to approve a spot bitcoin ETF despite receiving numerous applications. If BlackRock and others manage to break through the spot ETF market, it would offer the most convenient, compliant and acceptable product for both retail and institutional players to gain bitcoin exposure, analysts led by Gautam Chhugani wrote. The iShares unit of fund management giant Blackrock filed paperwork earlier this month with the SEC for the formation of a spot bitcoin ETF. This prompted other asset managers including Invesco and Wisdom Tree to apply or reapply for a bitcoin ETF product. Bernstein notes that the Grayscale Bitcoin Trust is only 3% of the total bitcoin market cap, which means there is headroom for a compliant ETF to grow its share as a bitcoin on-ramp solving the pain of custody. With the current GBTC annual fee at 2%, there is room to bring the pricing in line with more traditional asset ETF’s, the report added. Those are significantly cheaper, and tend to be less than 0.5%. Grayscale is owned by blockchain’s parent company, Digital Currency Group (DCG).

Read more: Blackrock’s Bitcoin ETF Would Be a Big Deal

Edited by Sheldon Reback.

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