Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 5. (Read 17175 times)

gensler could have thought up a new goal post for crypto specific ETF. and played E warrens anti-bitcoin tag-line/rhetoric to the max. but he didnt really push the boat further into the deep dark oceans of regulation/warrens agenda by adding many extra rules that differ to tradeFi.

yes any ETF if held up and causing unrealistic business costs due to delaying past final deadlines for no reason can trigger lawsuits.. but with only ark21 being the final deadline jan 10th.. the other dozen would not have cause to sue and would have had to wait until march-june if gensler really wanted to delay things
gensler could have insisted ark21 wait 30 days after approval and ark21 would have had to peacefully wait too as thats the norm
but gensler allowed then to start ASAP

yes the grayscale lawsuit last year made the SEC actually communicate more. but i can think of a variety of ways the SEC could have denied most of the ETFs yesterday.

id say a nuanced answer of

gensler is pro bitcoin but has to toe the Elizabeth warren tagline to keep his job(politically)
gensler declined grayscale last year due to internal politics
grayscale had influence only directly on making SEC fear ark21 lawsuit if ark was denied for lame reason

legally gensler only had to announce ark21. but wanting fair competition and to get ETF running by approving all
he said they didnt need to wait 30 days and i think thats more of his pro bitcoin side showing.. even if he concluded his annoucement statement with echos of e warrens tagline of anti-bitcoin sentiments

i previously assumed gensler would have only approved 1-4 due to the media impressions of drama remarking gensler as anti-bitcoin and his bosses (senators) being anti bitcoin. so assumed the stance of it being a tough call for gensler to blanket approve all..
however he turned out to be lenient in the end

---

now with all thats said and the ETF decisions made. this topic can get back to GBTC specific details or details affecting GBTC now the whole scenario is dealt with

Personally I am still a bit confused regarding how GBTC gets anyone to trade with them at a price that might be close to NAV, since the fees on the Grayscale product are many times higher than the fees on other products.  So why would anyone want to buy the GBTC ETF on an exchange when there are other products that compete on lower fees?  The discount would likely ONLY go away if there is some abilities to trade them on the open market in ways that are similar to the other ETF products.  Does anyone have any kind of explanation for that?

I think Grayscale contributed a lot to the SEC approving the applications that it gave this agency. Because if Grayscale had not won the case against the SEC, the SEC would probably have rejected them again in the Bitcoin spot. Right?

That's why the SEC has done nothing but approve them, or else the SEC can be sued, as far as I know, if they still reject it for sure, and Gensler will also be destroyed as an official government by the people of the US. This alone agrees with my observation of events.

Tweet from Grayscale

There are a lot of crypto assets, but only one $BTC. There are a lot of spot Bitcoin ETFs, but only one $GBTC. 

https://twitter.com/Grayscale/status/1745486230304043337?t=UYvu-14r4nVyz5gkttDs8w&s=19

Email from Grayscale:

grascale is a different model to blackrock

check for instance jp morgan broker->customer fees
and then do blackrock fee+JP morgan fee=

note the difference

It's a nice historical moment.
Grayscale will finally be converted to an ETF trading on the NYSE Arca.
Surely, a hefty 150 bps one, by far the one with the highest commissions, but surely beneficial to the holders, as the discount just narrowed to 2%.

if the latest announcement (currently down: error 404) is true
then grayscale is approved and has been accelerated to not need to wait standard 30days after notice. nor been delayed longer
meaning they can start trading ASAP

as can most the others

(at this present moment a few are still waiting for the penny to drop)

im not your daddy or mommy.. im not here to spoonfeed you.
let 2024 be the year you start DYOR

if you want tax advice go find a financial adviser

i dont want anyone dependant on me..
i just want idiots to stop acting ignorant hoping someone will spoonfeed them

instead try to do your own research. then you wont need to be corrected

i only correct things when i see ignorant people passing stupidity between each other where it then manifests into cults of stupidity

Ok... that makes a wee bit more sense, once we remove your various interweaved denigrating remarks. 

I guess you cannot help yourself to throw in a few zingers along the way...
 


Well, maybe you are right that tax ramifications will not be as BIG of a deal as many folks (including yours truly and fillippone, apparently) are considering to be factors.  Good thing we have you holding our hands and setting us straight, even though you seem ongoingly reluctant in our relationship (apparently we are dependent upon you, while you continue to kick and scream about it.. I am almost ashamed to say, thanks daddy frank.). 

you keep refering to the taxability of things. which shows your not on the same page

grayscale IS THE PRIMARY MARKET(wholesale)

lets compare again
blackrock is primary market(wholesale) for JPmorgan to join as AP.. where by JPmorgan then sell its basket of shares to secondary market(retail) end users

secondly
the need for grayscale to build up more baskets via AP (grayscale already have 600k+ coin seed sponsored)
vs
the need for blackrock to build up more baskets via AP (blackrock only have 227 coin seed sponsored)

shows grayscale dont need it.. blackrock does.. so thats why blackrock are doing a 0.2% for first $5bill to entice AP to join them

..
grayscales model is different to other ETF

Now I get it.
Anyway, not so sure I can agree on the subsance of your reasoning.
It’s true that today GBTC has no primary market, hence no need for AP, but things will change upon ETF conversion. Goldman has been mentioned as an AP member for Grayscale, for example.
So a lot of your points would cease to be valid.

i was referring to something else

seems you too conflate or not able to understand the differences of relationship of ETF vs AP vs end user customers

anyway
tax is only incurred when shares/assets are converted to fiat (either AP dissolving shares to cash out basket, but then not re-buying within reasonable time. or end users selling shares for fiat)

grayscale are not needing to dissolve or creating baskets.. so please forget "grayscale incur tax"
they also have their many baskets and so dont need AP(agents) dissolving/creating baskets

in short
grayscale are not interested in enticing new baskets when they launch so they dont need to do 0% for first X bill deals, or lowball offers
yes grayscale can change their fee's at a moments notice even after ETF acceptance/launch

---

from an end user standpoint
blackrock charge upto 0.3% to jpmorgan for JPmorgan to be a AP(agent/broker), JPmorgan than attach their own fee's ontop, meaning an end user investor might be charged 1.8%-3% per trade. sometimes fixed cost per trade

however grayscale is a different model for end user investments, which is why grayscale can have higher fee's and still be competitive



i did originally make a long detailed post explaining the encyclopedia of investment infrastructure...and the different levels of middlemen in play and lots of % of fee's per level, and who incurs tax and when...  but maybe if you really want detailed answers just DYOR and research on google. you will get the answers faster, compared to writing forum posts and waiting hours for someone to spoonfeed you

I have my doubts about whether I am as confused as your presentation seems to be equally confused or confusing.

You seem to be talking about the 1.5% as if it were a one time charge, and it seems to be an annual management fee... So if someone just chooses to stay in the Grayscale ETF (after conversion), they will be incurring a 1.5% fee every year, and yeah, they are likely not going to get any new clients/customers entering the fund if they are going to have to pay1.5% as opposed to going with another ETF that has lower fees.  Now if the client is already existing in GBTC and they choose to cash out and move to a lower fund, then they would have a taxable event.

The 1.5% paying themselves comment is also confusing because my understanding is that grayscale used to shave off 2% per year and then after the conversion they will only shave off 1.5% per year... so they are paying themselves with client money, and yeah Grayscale does own some of its own shares, perhaps, but I wasn't even talking about any of that or even wanting to get in the weeds of any of it.

My main point was just to clarify a couple small things from the interview and then just give an overview for what Seyffart and Balchunas might have had been saying in the interview and I highlighted a few points that they made.  I was not even trying to get into the weeds of the matter.


I doubt that I am even wanting to get into that level of analysis with my comments, so you seem to be reading into whatever I was asserting or summarizing from what I heard within the podcast..


Sounds like you are going way into the weeds about potential tax ramifications, and I doubt that you are even really clearing things up in any kind of meaningful way that I consider very much related to what I had already stated.  I already mentioned that person who bought GBTC shares and then gets converted into the Grayscale ETF does not seem to experience a taxable event, but if they sell their GBTC shares prior to the conversion or maybe the refuse to go through the conversion, then they would likely have a taxable event.  They would also likely have a taxable event if they sold their Grayscale ETF shares after the conversion.  So are you saying anything different than that, and does it even matter to whatever we were talking about?  If Grayscale offers one product with 1.5% fees and then they offer another product with 0.30% fees, then they are likely going to attract new clients into the product with the lower fees, and little by little the one with the higher fees would shrink in size but until the clients leave, they would be able to charge them the 1.5% higher fees, and maybe Grayscale would choose to reduce those 1.5% fees down to more reasonable rates with the passage of time? Perhaps?  but maybe they won't and the clients will just stay in that product until they are ready to incur the taxable event of selling whatever shares they have.. or maybe if they can roll their grayscale ETF shares over into another product of a similar type and not incur a taxable event, then they might choose to do that at some date in the future when (or if) that becomes a possibility.  I am not claiming to be any kind of tax expert (or even to know much of anything about the matter beyond basic observations and maybe my attempts at parroting (inaccurately from your interpretation) from what I hear from other supposed experts)..

Sorry, could you clarify this above?
I am afraid I totally lost you.
As far as I understand, Grayscale has such outrageous fees as they already have 27 billion in AUM, and for sure, none of them want to incur a taxable event just to avoid 100 bps of yearly fees. In a way, they are trapped inside GBTC.
But maybe you were referring to something else I didn't understand.

their are special exceptions for fund managers. they are not charged cap gains per share sell/buy or conversions.. otherwise they would not be able to day-trade small 0.x% profits if they are charged 20-40% per trade/exchange

there are other exceptions that allow offsetting gains if they same day then buy assets
the capgains is only really triggered if you sell and stay sold.. thats when cap gains is "realised"

grayscale has 600k+ coins. they dont need more baskets entering via AP's
i think you are still confusing the AP(agents of baskets) vs the end user customers selling/buying individual shares

Seyffart and Balchunas are well researched, but i feel you still need to understand what they are saying.
for instance they say that ETF waiver fee's for first X billion where as grayscale have 1.5% from start. and they also say the fee's can change even as early as the next day..
grayscale dont want more AP's handing in baskets. grayscale already has 600k+btc.. and because they own those 600k+ they are not actually paying 1.5% because they are paying themselves, so it cancels out. its more of a deterrent to get share holders to buy up enough shares to create baskets to vote out and dissolve shares. the 1.5% is more of a "hold" signal to prevent trades, basket forming to exit


individual share holders are different group to the AP managing baskets of shares.
please learn the difference
you confuse "clients" as both AP managing baskets AND "clients" end share individual share customer

maybe try to use "agents" for the AP managing baskets that are affected by the "in-cash" stipulation instead of "in-kind" dissolving of shares to unlock btc.. incash= forcing those unlocked btc to be darkmarket(otc) sold by coinbase into cash to give cash to AP

clients are the end user individual share customers, whom cant individually dissolve shares/unlock btc.. and are just buying/selling shares at the front end share platform
..
CLIENTS are taxable on front end share platform. because that is standard share purchase/selling for fiat. always has been*
agents/grayscale are not taxable per client trade on front end share platform
..
agents/grayscale are taxable when dissolving share baskets due to in-kind rule
clients are not involved in the basket thing

the 'in-kind' SEC rule is about the basket handling between sponsors/AP (agents)

*there are ways to offset gain/losses if shares are sold and new shares bought same-day, in an umbrella fund like a pension portfolio manager
(there are many exceptions to the cap gains rule when shifting between cash-shares)

When I made my earlier assertion that I thought that Grayscale's conversion from a Trust to a spot BTC ETF was going to be a taxable event based on the in-cash process rather than an in-kind process, I was likely overly relying upon the talking heads on the Laura Shin podcast (which is James Seyffart and Eric Balchunas), and I have heard these guys discuss the BTC ETF on a variety of occasions, including on other podcasts.  Essentially, they seem to now have changed their opinions, to suggest that Grayscale conversion of it's clients (even though "in-cash") would not be a taxable event since no bitcoin would be sold, it is merely changing the wrapper as they had said around minute 45 in this linked podcast, released today.

This particular podcast is a bit more than an hour and surely I might be mixing up what Seyffart says versus what Balchunas says, and does it really matter too much, if they seems to have some level of expertise and experience that backs up their points fairly well, and during the podcast, they go into a fairly detailed discussion and are currently arguing a belief that the ETFs are likely to be approved by Wednesday, and allowed to trade by Thursday.. and so the alternative theory would be that they would be allowed to trade on Wednesday.. and yeah of course, they are talking from their own expertise - and I consider this to be part of my own research, even if Franky would conclude that the level of research is not sufficient for him, and that's his choice regarding how he wants to spend his time.

When it comes to Grayscale specifically, these guys seem to be suggesting that Grayscale is keeping their fees so high (at 1.5%) because they are likely going to try to milk their current clients - who might not want to suffer a taxable event by converting, and they will end up offering a similar product that will have low fees like the other ETF providers are currently offering.  Still to be seen some of these speculative matters.

I could give less than two ratts' asses which one is better or which one to pick.  I am not making any recommendation that anyone use those products, but there are going to be people who are choosing ETFs based on what is available to them, and sure maybe they will have access to choose whichever one that they want, and maybe their will be limitations on which ones are available to them.

As far as the government is concerned, it seems that their job is to allow most if not all of the ETFs, and to let the market decide which is better.. so long as they ETFs meet the basic requirements, they should be approved, which maybe all 12, 13 14 or whatever will end up getting approved, then it is up to each of them to attract clients/customers.


Yes, maybe customers will end up choosing them.  I give few shits.

And, likely the government is supposed to be creating the appearance that they give few shits either, so long as people are able to freely choose which one(s) they want to put their money into.


This part of your answer seems repetitive.


I agree.. some kind of an approval seems imminent.


That does not seem likely, but if it were to happen like that, it seems that from your hypothetical Ark21 was not ready by its own doing.


I don't see what is so challenging about your hypothetical, unless you are saying that the SEC is creating the condition in which others are allowed to start first. 

I think that we are getting too much in the weeds, and neither of us is really adding any new value/information at this point.

im not touting blackrock out of favouritism. nor do i think the SEC would..

put it this way. imagine any other legal setting
lets use court cases of DUI's as a for instance
there is a defence attorney that has been defending DUI suspects for decades. and has won 99%

then there is a naive defence attorney, never defended before, but has some guys with some experience advising him..

you just read their court history of case results(or lack there of)

which defence attorney would you pick?

its just basic common sense if blackrocks legal team have been filing ETF applications for decades, they know what to expect and have answers ready, rebuttals prepped and such

its not favouritism of "aww this young attorney looks young and cute, ill have him, over the old guy"
its more so of looking at the logical common sense of accepting the one with most experience, without favouritism

that said. only ARK21 has an actual final deadline in january so technically only ARK21 is the only one deserving of an announcement either way legally
which as we seen by grayscales final deadline last year. wasnt a defacto approval just because of final deadline status.

so there is chance none get approved in january from a legal prospective of previous precedence..

however the odds are more interesting this time compared to the grayscale decision saga last year. because the SEC is now actually talking and organising and actually shows movement

..
here is another pebble in the water, for you to splash about with thoughts over

what if ark21 gets approval on jan10th but is stated it cant start offering shares for XX days
nothing else about the rest is said on jan 11th,12th,13th,14th.. then on the 15th SEC announces 4 others are approved and can start offering shares in XX minus 5 days.. meaning they all start offering shares on the same day of a later date..

..
let me take the thought one pebble further
what if XX days was 90days meaning april 10th.. meaning long after some others FINAL deadline in march
whereby in march the others get approved and able to begin with just a <28 day delay. again meaning all start on april 10th

I never said that anyone can swap their shares (whether ETF or otherwise) for sats, but I was referring to a taxable event that happens if you go from BTC to cash versus if you went from BTC to BTC.


I did not notice, but I would imagine if they are one of the largest (if not the largest) asset manager in the world, then they must be doing something to make money (including having a variety of experiences and likely tentacles in a lot of places)


I doubt that I said that, but even if you are trying to act as if you are neutral, by your touting of Blackrock as so much better blah blah blah, you seem to be implying that it is acceptable for SEC to pick winners and losers and to give favorable treatment to Blackrock (even if you are not directly saying it)....


Sure, it could happen, even though we seem to have so much ramping up of expectations that the approval of various ETFs is imminent.

Don't get me wrong, I am not trading on what seems to be the sentiment of a lot of folks, besides uie-pooie, who watches the space in detail.

And, yeah, I know that people get hyped up, but it is seeming to be a pretty BIG deal - especially the way that there seems to be so much ongoing interactions with various ETF applicants (and various kinds of ongoing public filings of further preparations and millions being put into advertisements for ETF products) that seem to be pushing things along in terms of closer and closer likelihood of approvals, including good chances of earlier next week.. and yeah, it is not a done deal, but still.. seeming like pretty good odds of sooner rather than later approval.


Well, I agree with you on this point.  It is not approved until it is approved.