Asset management company Valkyrie aims to become the new manager of GBTC! Suggests lowering management fees and providing redemption options.

Grayscale's flagship fund GBTC continues to trade at a historical discount, while Valkyrie Investments, also a Bitcoin management fund, saw its co-founder and Chief Investment Officer Steven McClurg propose management changes for GBTC last week, expressing interest in becoming a new investor and manager for GBTC.

Valkyrie Investments

Valkyrie Investments is an asset management company based in Tennessee, USA, managing approximately $180 million in assets. It aims to introduce investment products suitable for the general public in the traditional financial markets using expertise in blockchain and traditional finance. Two of its well-known funds are the Bitcoin Futures Strategy Fund (BTF) and the Bitcoin Mining Fund (WGMI).

The Bitcoin Futures ETF, BTF, launched by Valkyrie, was approved and officially established in October 2021 with a current size of $18.63 million. The ETF allows Authorized Participants (AP) to arbitrage between the net asset value (NAV) of the fund and the ETF using their held assets, ensuring a stable anchoring relationship between the fund's net asset value and the price of Bitcoin.

Proposals for Managing GBTC

Steven McClurg, Co-Founder and Chief Investment Officer of Valkyrie, published proposals for managing GBTC on the internet on 12/28. McClurg previously served as an Executive Director at Guggenheim Partners and founded Theseus Capital, a fund under Galaxy Digital that promotes transparency in closed-end funds through Ethereum-based accounting. McClurg believes that his and his colleagues' experience in the acquisition or restructuring of closed-end funds can help GBTC overcome significant discounts.

In the article, McClurg mentioned that Valkyrie highly respects the contributions and influence of Grayscale and GBTC in the industry, but it is time for some changes following recent events involving the Grayscale Group. McClurg proposed the following suggestions for GBTC:

• Timely submission to the SEC of Regulation M to provide convenient orderly redemption at net asset value (NAV) for all investors needing to redeem. This will ensure that all investors can choose to redeem their shares at a fair price without any delays or hindrances.
• Reducing fees to a more fair level. It is suggested to charge a management fee of 0.75% instead of the current 2%.
• Attempting to provide investors with flexible options for redeeming Bitcoin and cash.

McClurg also announced the launch of Valkyrie Opportunistic Fund, LP, an actively managed fund that actively operates by seeking market opportunities, with the significant discount of GBTC being one of them. McClurg stated that through this fund's increased holdings of GBTC, Valkyrie hopes to realize the true value of Bitcoin for investors and actively pursue this goal on their behalf.

Interestingly, Valkyrie also applied for a Bitcoin spot ETF in 2021, which was similarly rejected by the SEC. However, unlike Grayscale's persistent efforts, Leah Wald, Co-Founder and CEO of Valkyrie, emphasized in the program that litigation against regulators is not only impossible to succeed but also not a smart move.