Grayscale Will Explore Returning Portion of Investor Capital if SEC Refuses Spot Bitcoin ETF

Grayscale Investments is exploring options to return a portion of capital of its flagship Grayscale Bitcoin (GBTC) product if the Securities and Exchange Commission (SEC) refuses to approve its spot bitcoin exchange-traded fund (ETF), the firm said in an investor letter.

One option is to offer tender for up to 20% of outstanding GBTC shares, which are currently trading at a 49% discount to net asset value (NAV), the letter said.

Grayscale has been knocked back multiple times in its mission to convert its bitcoin trust into an ETF, with the SEC citing a lack of regulatory oversight in a brief earlier this month.

The letter by Grayscale Chief Executive Michael Sonnenshein attempted to ease concerns among shareholders after a turbulent month across the crypto industry following the collapse of FTX, one of the largest exchanges.

Grayscale is owned by the Digital Currency Group and is a sister company of CoinDesk. Grayscale did not immediately respond to request for comment.

In June, Grayscale sued the SEC hours after the U.S. regulator rejected its ETF application, with the company saying that it "vehemently disagreed" with the SEC's decision.

At least in the short term, the Grayscale announcement appears to be having its desired effect, with shares in GBTC up 4.1% early Monday morning while the price of bitcoin is about flat from Friday's close.

UPDATE (Dec. 19, 13:50 UTC): Adds link to Grayscale's letter, corrects the line on the second paragraph to say "up to" 20% of outstanding shares.