By Josiah Wilmoth
The sponsor of the Bitcoin Investment Trust (OTC: GBTC) has unveiled the next fund in its line of institutional investment products: a cryptoasset fund that provides investors with exposure to a basket of the market’s most valuable assets.
Grayscale Launches Large Cap Cryptoasset Fund
Barry Silbert — founder of the Digital Currency Group, Grayscale’s parent company — made the announcement on Wednesday at Yahoo Finance’s All Markets Summit: Crypto.
The Digital Large Cap Fund holds market-cap weighted positions in the five largest cryptoassets, stakes which will be rebalanced quarterly in response to market movements.
This separates it from Grayscale’s other funds — the Bitcoin Investment Trust, the Ethereum Classic Trust, and the Zcash Trust — each of which holds a single cryptoasset.
At launch, the fund holds bitcoin, ether, ripple’s XRP token, litecoin, and bitcoin cash, which provides investors with exposure to 70 percent of the cryptoasset marketplace, as the vast majority of the ecosystem’s value is concentrated among these assets.
Silbert said that a cryptoasset fund that holds multiple assets is the ideal way for new investors to participate in the burgeoning industry, as conventional wisdom states that most coins and tokens will either become extremely valuable or worthless over the long-term. Since the Digital Large Cap fund rebalances quarterly, investors will always have exposure to the most valuable assets.
“People don’t know or care which coin will win,” he said during an interview with Yahoo Finance. “They just want to be in this asset class. We have people who want to put $100 million into this.”
The fund will initially be offered through a private placement and restricted to accredited investors. After one year, Grayscale hopes to list the shares publicly, which would allow non-accredited investors to purchase shares. Some investors may find the fund’s three percent management fee to be excessive, but they will likely overlook this flaw given that the fund does not currently have any competitors.
As with Grayscale’s other products, the fund’s shares can be held in IRAs and other tax-advantaged accounts, which helps offset the premiums that investors must generally pay to purchase shares once they begin trading on the secondary market.
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Feature Image: Yahoo Finance