Grayscale Investments has been on a roll as of late. After recording massive volumes for its Bitcoin Trust and launching a media campaign that told Americans to “drop gold, buy Bitcoin,” the branch of crypto conglomerate Digital Currency Group was revealed to have received approval to make advancements in the Ethereum (ETH) investment ecosystem.
Meet ETHE, Bitcoin Trust’s Ether Counterpart
In a press release obtained by Blockonomi on Thursday, Grayscale has just received a regulatory stamp of approval from the Financial Industry Regulatory Authority (FINRA) to offer shares in its Ethereum Trust publicly.
It was stated that the product allows investors to gain “exposure to the price movement of ETH through a traditional investment vehicle without the challenges of buying, storing, and safekeeping”. Once the product launches in a few weeks, it will trade under “ETHE” on the OTCQX market. In a comment conveyed to Bloomberg, Michael Sonnenshein of Grayscale remarked, “The secondary market really opens up the opportunity for any and all investors.”
The thing is, this vehicle may not be entirely friendly to mom and pop investors. In a recent thread, Larry Cermak, the director of research, at The Block, pointed out that Grayscale’s products are inherently biased towards institutional clients.
The analyst wrote, “Only qualified accredited investors can invest directly in GBTC with a minimum investment of $50,000.” For those unaware, accredited investors are those with a net worth (minus your primary home) of over $1 million (a small percentage of the population, even in the U.S.) and/or those that have earned a taxable income of over $200,000 per year. Very few investors fit these requirements.
The data would corroborate the fact that Grayscale’s vehicles aren’t all too friendly to common Joes and Jills. In May, Grayscale released its “Digital Asset Investment Report” for Q1 of 2019.
According to the report, Grayscale pulled in over $42.7 million over the first three months of this year. This isn’t a hefty sum per se, what makes this notable is that over 73% of the $42.7 million came from institutional investors, half of which were an unnamed group of hedge funds.
So, it is clear that despite this news, it is likely that the firm’s inflows will still mostly be sourced from institutional players. But, this may be just a sign of the times.
Regardless, with this move, it seems that Grayscale is trying to replicate the success that its Bitcoin Trust has seen, which has become a go-to BTC-backed product for institutional players. The thing is, the Bitcoin Trust, which trades under GBTC on over-the-counter markets, often trades at over 30% BTC’s spot price, implying a premium that could be detrimental to investors.
Ethereum Gets Another Bona Fide
Anyhow, this only adds to Ethereum’s recent success. As Blockonomi reported earlier this month, a “senior official” that has knowledge of the U.S. Commodity Futures Trading Commission (CFTC) claims that they are entirely amicable towards Ethereum. He/she explained that “we can get comfortable with an Ether derivative being under our jurisdiction,” confirming that like Bitcoin, ETH is a non-security.
This hasn’t been the only good bit of news for Ethereum though. In late-April, rumors revealed that Samsung, one of the world’s largest technology shops, has intentions to build an Ethereum-based blockchain that will host its own token.
And more recently, Bosch, a German engineering giant, revealed that it is trialing an Ethereum-based smart contract system. Speaking to Decrypt, a firm spokesperson was stated that the firm has been working with the blockchain, yet scant details were exposed. It is important to note that blockchain has been proposed as a way to promote the growth of the Internet of Things, which is likely what Bosch is going for.
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