Competition for Bitcoin ETF funding intensifies, is Grayscale a takeover target? | CoinDesk JAPAN

Competition for Bitcoin ETF funding is becoming fierce between BlackRock, Fidelity, and other financial institutions.

Experts pointed out that new entrants could consider acquiring “previously existing competitors” if they wanted to achieve significant growth. Yes, it’s grayscale.

On January 10, Grayscale received permission to convert the Grayscale Bitcoin Trust (GBTC) into an ETF. At the same time, nine other companies gained the ability to create Bitcoin ETFs.

Grayscale started with a big lead. GBTC, which has been operating as a closed-end fund for 10 years, had nearly $30 billion in assets under management. On the other hand, new entrants are starting from scratch. The gap has narrowed somewhat as investors pulled money out of GBTC for a number of reasons and new ETFs attracted capital. However, GBTC’s assets under management are at $22 billion, far ahead of the next two companies. BlackRock and Fidelity are both still worth $1.4 billion.

Competitors in pursuit may reconsider GBTC.

“There’s a good chance that Grayscale will be acquired. They’re the current standard, and even my dad has known their name for a while,” said Brian D., founder and CEO of BDE Ventures. said Brian D. Evans.

Grayscale could not immediately be reached for comment.

(Grayscale is the top company with $22 billion in assets under management. Source: Bloomberg Intelligence)

One strategy traditional financial players use to grow their business is to acquire competitors. This time, 10 new Bitcoin ETFs have been introduced, which is unprecedented in the financial industry.

“Strategic acquisitions of companies like Grayscale make a lot of sense for traditional ETF issuers, if the price makes sense,” said Roberts, president of advisory firm ETF Store. Mr. Nate Geraci.

“Bitcoin spot ETFs are only two weeks old, but they are already highly competitive and clearly a game of scale. Traditional ETF issuers are targeting the right crypto-native companies. By doing so, you can quickly increase your assets under management, gain business management expertise, and gain “credibility in the crypto industry.”

British crypto asset management firm CoinShares recently acquired the ETF division of US investment firm Valkyrie Investments. The division is one of the issuers that received approval from the U.S. Securities and Exchange Commission (SEC) for a Bitcoin ETF. Geraci predicts that such acquisitions could soon increase.

Related article: UK CoinShares secures exclusive option to acquire US Valkyrie ETF division – BTC ETF approval and expansion into the US

But for Grayscale, the timing of a potential acquisition may be difficult to predict given the multiple uncertainties surrounding the company.

“It’s theoretically possible that someone could acquire Grayscale, especially given the current issues surrounding the parent company, perhaps over a long enough time horizon,” Bloomberg Intelligence said. said analyst James Seyffart.

Grayscale is a subsidiary of Digital Currency Group (DCG). DCG, its subsidiary Genesis, and business partner Gemini Trust were sued by the state of New York in October 2023 for allegedly defrauding investors of more than $1 billion.

Additionally, more than $2 billion in GBTC has been sold since the ETF conversion.

BDE Ventures’ Evans said DCG’s legal troubles and GBTC’s large outflows could hasten the deal.

“The timing is a matter of concern. If an acquisition happens, you will want to get your hands on Bitcoin before the price goes up further.”

｜Translation/Editing: CoinDesk JAPAN Editorial Department
｜Image: Grayscale CEO Michael Sonnenshein (Shutterstock/CoinDesk)
｜Original text: Is Grayscale Takeover Bait Amid Bitcoin ETF Battle?