BlackRock ETF launch would put pressure on Grayscale's valuation: Bloomberg analyst

Quick Take

  • BlackRock’s entrance into the bitcoin ETF market would put pressure on Grayscale’s valuation and fees, according to Bloomberg Intelligence analyst James Seyffart.
  • Seyffart joined The Scoop this week to discuss the new filing in an episode that will be released this Thursday.

BlackRock's entrance into the market for crypto-tied exchange traded products might be a welcomed development by industry bulls, but it could prove to be a headache for one of the largest market participants.

The company, which last week submitted a filing to the U.S. Securities and Exchange Commission for a new trust tied to the largest cryptocurrency, is among a number of asset management firms keen to introduce a spot-based product to the market. Grayscale, which has long offered a wide-range of trust products, is another. 

Unlike an ETF, which trades on a national securities exchange, Grayscale's products trade over-the-counter and don't always track the price of the underlying asset. Still, it has been able to charge a hefty fee to traders. 

Grayscale, the largest crypto native asset manager, is suing the SEC to upgrade its trust to an ETF.

BlackRock rival product

Data from The Block Research indicates that the firm brought in more than $230 million from its flagship GBTC and ETHE products since the beginning of the year. Still, the 2.0% and 2.5% annual fees it charges to manage those assets may soon collapse if BlackRock can successfully bring a rival product to market, says James Seyffart of Bloomberg Intelligence. 

Grayscale's Bitcoin Trust manages over $16 billion.