Those are true, and theyre the party line, but the whole truth is that a redemption program is possible, but they choose not to pursue one. Grayscale views their AUM as operating leverage vs. the SEC in its ETF conversion plot, but more importantly, they view it as a billion dollar guaranteed gravy train and permanent capital given the BITs current Hotel California structure. Grayscale as the BITs sponsor is the ultimate decision maker when it comes to whether they: file for an ETF conversion (they did) pursue a Reg M redemption program (they wont) liquidates its trusts (yeah, right) In the meantime, every DCG-Grayscale GBTC buyback isnt an indication of confidence per se, so much as it is a money movement from one pocket to the other to avoid shareholder ire. They have no incentive whatsoever to allow redemptions. Can you blame them?

The SEC is asleep at the wheel here, and Gensler is complicit in allowing the $6-10 billion gap between GBTC and the trusts NAV to persist. Grayscale pursues an ETF they know wont come from this SEC with 0% urgency. We wont do redemptions until the SEC approves an ETF is a smart hostage negotiation when they are dealing with an optics-oriented careerist like Gensler, who will face zero critical backlash from the press for his stonewalling. This shit is too complicated to rile people up, so investors lose, while Gensler and Grayscale win. That brings us to the frequent news this year from DCG, and their announcements regarding GBTC repurchase authorizations. (At writing, they had approved $1 billion, though they had only executed ~$400 million of transactions.) This isnt heroism, its a riskless option.

Unwitting investors think DCG can close the NAV gap (impossible given the size of the trust), but whats really happening is that either a) The ETF converts, and GBTC comes back to par, DCG realizes GBTC gains, b) the AUM sits there and DCG *pays itself* (through Grayscale) the 2% management fee on its GBTC shares, or c) they do finally roll out a Reg M redemption program or liquidate the BIT and get their bitcoin back at par. After I wrote about this last month, one lawyer pointed out that these situations get into court all the time, definitely possible especially if Grayscale continues to collect fees while doing nothing about the discount. Remember they have a fiduciary duty to the trust. Ok, fine, but remember they can argue that they ARE taking steps to close the gap via buybacks and the ETF application. They may be untouchable in that regard. But I think its fair for people to warn newer investors about the toxicity of Grayscales newer trusts, which tend to perform even worse.

Prediction: Barry Silbert is Gary Genslers Daddy. (100% confidence) Grayscale wins, and continues to make a mockery of the SEC. Investors lose as GBTC trades at an average 15%+ discount to NAV (75% confidence) with no Reg M program or ETF (95% confidence). (Further evidence that Barry is a master at the secondary market and its information and legal asymmetries is DCGs recent $10 billion valuation, which feels like a 60-70% discount for a company throwing off nearly $1 billion in annual EBITDA, with billions on its balance sheet.) 78 3. Lender Reserves This hurts me to write, but stablecoin and lending product regulations would be a good thing for the industry. We sorta lost our high ground once we started to see some of the assets stablecoin issuers and lenders were warehousing on-balance sheet this year, including Grayscale shares!