Grayscale Bitcoin Trust (GBTC) (Grayscale Bitcoin Trust (BTC) (GBTC) Stock Price, News, Quote & History – Yahoo Finance) is an exchange traded fund launched and managed by Grayscale Investments, LLC. The fund invests in Bitcoins. It invests through derivatives such as futures, swaps, and other CFTC-regulated derivatives that reference digital currencies. The fund seeks to track the performance of the TradeBlock XBX Index. Grayscale Bitcoin Trust was formed on September 25, 2013 and is domiciled in United States.
GBTC was one of the first vehicles to offer Bitcoin exposure to investors, but note that this fund is an OTC ETN, not an ETF. ETN’s mean potential counterparty risk.
According to Grayscale themselves, GBTC, which represents fractional bitcoin ownership, “enables investors to gain exposure to the price movement of bitcoin through a traditional investment vehicle, without the challenges of buying, storing, and safekeeping bitcoins.”
GBTC is not physically backed. It allows accredited investors to buy into the fund through periodic private placements, with a 20% premium and a 2% fee. GBTC doesn’t reliably track the price of Bitcoin itself, for better or for worse.
Grayscale actually announced on August 4, 2021 that it is getting the gears turning to convert GBTC to an ETF, though the SEC hasn’t allowed the structure yet.