Entities must have $5 million in liquid assets or all beneficial owners must be Accredited Investors. An individual must earn more than $200,000 a year (or $300,000 per year with a spouse or spousal equivalent), have a net worth over $1 million either alone or together with a spouse or spousal equivalent, excluding their primary residence, or hold in good standing their Series 7, Series 65, or Series 82 professional certifications. Most individuals are not Accredited Investors. *Grayscale’s private placements are only available to Accredited Investors as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. Shares of Grayscale Products are offered to institutional and individual accredited investors* in private placement transactions exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 506(c) thereunder.Įach Product’s investment objective is for the value of its shares (based on digital assets per share) to reflect the price performance of such Product’s underlying digital asset(s), less fees and expenses.** Modeled after popular commodity investment products, each Product was created for investors seeking exposure to digital assets through a familiar investment vehicle. ETFs trade in line with NAV as a result of the simultaneous creation and redemption mechanism available. The term “ETF” also encompasses “exchange-traded products” or “ETPs”, like GBTC would be, that are not subject to the registration requirements of the ‘40 Act. *We use the generic term “ETF” to cover exchange-traded investment vehicles that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), also commonly referred to as “exchange-traded funds” or “ETFs”. *We use the generic term “ETF” to refer to exchange-traded investment vehicles, including those that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), as well as other exchange-traded products, or “ETPs”, which are not subject to the registration requirements of the ‘40 Act. In connection with ETF conversion, products would have ongoing creation and redemptions, and the arbitrage mechanism inherent to ETFs would effectively eliminate premiums and discounts to the value of their underlying assets. While the SEC has not currently approved a spot crypto ETF, Grayscale believes its SEC-reporting Products present a strong case for conversion when permitted by the U.S. This also reduces the initial one year holding period of the private placement to six months. The requirements of being SEC-reporting exceed the standard of reporting already met by these Products as OTC Markets public quotations, including heightened levels of disclosure to offer even greater transparency for investors, and subjects the Products to additional regulatory oversight. Grayscale Products are the first SEC-reporting companies in the industry. This also allows all investors -accredited or not - to access Grayscale products through certain brokerage or retirement accounts, regardless of investment size or holding period.ĭue to the lack of an ongoing redemption program, publicly traded shares may trade premiums or discounts to the value of their underlying assets. This provides liquidity to existing private placement investors by allowing them to continue to hold their shares in their brokerage account or sell them through their broker in the public market. Grayscale pioneered obtaining public quotations for unrestricted shares of our private placements. Shares purchased in the private placements are initially restricted for one year. Grayscale Products first launch as private placements, allowing accredited investors to gain crypto exposure through a familiar investment vehicle structure. As a Product progresses through this intended lifecycle, there is a correlated increase in investor access and transparency. Each Product is intended to follow a four-stage life cycle - with the ultimate goal being conversion of the Product to an ETF*.
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