Ethereum
Grayscale Ethereum Mini Trust, Key Split Concerns Addressed
After Grayscale announced the reduction of fees for its Ethereum Trust derivative product into an Ethereum Mini Trust ETF, some crypto enthusiasts are curious to know more about the product. A number of people are concerned about how it will work, given that this is a new change.
Mechanics for Grayscale Mini-Trusts
James Seyffart, senior ETF analyst at Bloomberg, took the time to explain the mechanics of Grayscale’s new product. He noted that it would be essentially the same for the Grayscale Bitcoin Trust and BTC Mini Trust ETFs. In other words, if you own 1,000 shares of ETHE, you should receive 1,000 shares of mini ETH. That’s from a stock perspective, but from a value perspective, it’s quite different.
Someone who owns $1,000 in ETHE or GBTC will end up with $900 in the original fund and $100 in the new mini ETFs after the splits.
Make a thread about the situation for @Shades of greyspin-off of $ETHE & $ETH because I’ve gotten about a million questions about it. The mechanics will be essentially the same for $GBTC & $BTC spin-off. If you own 1,000 shares of $ETHEyou should receive 1,000 mini shares $ETH
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— James Seyffart (@JSeyff) July 19, 2024
It should be noted that July 18 was initially announced as the record date for the first issue and distribution of shares of the new Grayscale Ethereum Mini Trust. However, it has now been rescheduled for July 23 while the GBTC spin-off at BTC Trust
is scheduled for July 31, as previously announced.
Grayscale BTC and ETH Mini-Trust Share Distribution
As a criterion for distributing shares, Seyffart said one must be the owner of those shares on the record date. He went on to say that the record date was the reason for the drop in ETHE’s price on Thursday, when trading began. Seyffart believes GBTC will follow a similar trend when its split occurs in about two weeks.
According to the ETF analyst, the current market value of ETH is $29. “Theoretically, ETH shares would hit your brokerage accounts at a much lower price (price per share) because you are getting an equivalent number of shares in the new fund, but that is 1/10th the value of your original position. Somewhere between $2 and $3 per share?”
He claims the same applies to GBTC, which is currently valued at $59 per share. The BTC Trust is expected to trade between $5 and $6 per share based on the current price.
Meanwhile, referral fees for the Grayscale Bitcoin Mini Trust and the Ethereum Mini Trust has been set at 0.15%. This makes this duo the cheapest crypto ETF products on the market to date.
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