Grayscale Bitcoin Trust buyback

Grayscale Bitcoin Trust suspends new investments on heels of buyback

With its stock trading as much as 15% below the value of its Bitcoins, the company already announced a $250 million share buyback this morning

Hours after announcing a stock buyback aimed at shoring up its price, Grayscale Bitcoin Trust has suspended all new buy-ins.

The digital asset management firm Grayscale Investments announced on March 10 that it plans to buy $250 million of its own GBTC shares, which have traded as much as 15% below the price of the Bitcoins it holds.

Stock buyback plans are often used on Wall Street to shore up the price of ailing stocks or bump strong ones even higher. By decreasing the number of shares available, the theory goes, the stock price will go up. It often works.

Grayscale’s shares have been ailing recently, as Canada approved a pair of Bitcoin exchange traded funds—the first in North America. The first ETF, Purpose Bitcoin ETF, roared to life with more than $500 million invested in just the first few days. 

Grayscale’s various crypto trusts are more or less the only investment vehicles available to companies that want to invest in Bitcoin but not own it, so it has been seen as a substitute for ETFs. It routinely closes the trusts to new investors.

That Canadian competition, along with the growing belief that the U.S. Securities and Exchange Commission’s crypto-friendly new chairman will soon approve long-awaited American ETFs, has hurt.

SEC Chairman-nominee Gary Gensler’s previous job was teaching digital assets and blockchain at MIT, where he was seen as an important and knowledgeable figure in the industry.

So far, VanEckNew York Digital Investment Group (NYDIG), and Valkyrie have filed ETF plans with the SEC.

But most notably, on March 2 Reuters reported that investment banking giant Goldman Sachs seemed to be preparing to seek approval for a Bitcoin ETF.

On March 9, Digital Currency Group, Grayscale Investments’ owner, tweeted out a list of job openings that included nine ETF positions, including compliance officer and several sales directors.

That was seen as a pretty clear indication that the company intends to get into the ETF business itself, if and when the SEC approves them.

Disclosure: The author’s 401k contains a GBTC investment.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.