Grayscale is seeking the SEC’s approval for a Bitcoin Mini Trust to reduce its Bitcoin ETF fees.

Grayscale has revealed plans for a Bitcoin Mini Trust, aiming to provide a more cost-effective alternative to its existing $28 billion GBTC spot Bitcoin ETF. The proposal, outlined in a recent SEC filing, involves reallocating shares from the GBTC ETF to finance this new offering.

The introduction of the Grayscale Bitcoin Mini Trust seeks to decrease aggregate fees for current GBTC investors, assuring them of reduced expenses without facing capital gains tax when shifting to the new fund. This move is crucial, as the avoidance of capital gains tax has been pivotal in retaining investor loyalty to GBTC, despite its higher fees compared to rivals.

Although the specific fee structure for the mini trust has yet to be disclosed, insiders anticipate it will be competitive, aligning with the lower end of the market. This positioning aims to offer a compelling alternative among existing Bitcoin ETF offerings.

Despite the GBTC's dominance in the market, even after transitioning from a closed-end fund to an ETF, its higher fee rate of 1.5% contrasts with the lower fees charged by competitors like Franklin Templeton Digital Holdings Trust (EZBC) and Bitwise Bitcoin ETF (BITB), which charge 0.19% and 0.2%, respectively.

The launch of both standard and mini versions of ETFs within the industry is a common practice aimed at catering to a broader spectrum of investor preferences and financial capabilities.

Despite a significant outflow of over $10 billion from the GBTC following the approval of several spot Bitcoin ETFs earlier in the year, the value of the main fund has remained steady. This stability is primarily attributed to the bullish crypto market, which has counterbalanced the impact of these outflows.